FORM 10-SB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CSCC CASINO SOFTWARE CORPORATION
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(Name of Small Business Issuer in its charter)
British Columbia, Canada None
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(State of incorporation or organization) (Employer Identification Number)
Suite 350-13775 Commerce Parkway
Richmond, British Columbia V6V 2V4
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(Address of principal executive offices) (zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares
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(Title of Class)
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TABLE OF CONTENTS
Item of Form 10-SB Page
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PART I
Item 1 Description of Business 4
Item 2 Management's Discussion and Analysis or 24
Plan of Operation
Item 3 Description of Property 28
Item 4 Security Ownership of Certain Beneficial Owners 28
and Management
Item 5 Directors, Executive Officers, Promoters and 31
Control Persons
Item 6 Executive Compensation 34
Item 7 Certain Relationships and Related Transactions 35
Item 8 Description of Securities 36
PART II
Item 1 Market Price of Dividends on the Registrant's 39
Common Equity and Other Shareholder Matters
Item 2 Legal Proceedings 39
Item 3 Changes in and Disagreements with Accountants 39
Item 4 Recent Sales of Unregistered Securities 39
Item 5 Indemnification of Directors and Officers 41
Part F/S Financial Statements 44
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PART III
Item 1 Index to Exhibits 57
Item 2 Description of Exhibits 57
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Overview. The Registrant is engaged in the business of designing,
developing, marketing, and leasing PC-based software systems for use in the
management of casinos and other gaming facilities. The Registrant's initial
software system is known as CasinoWare<F1>. CasinoWare is designed to allow
for the complete integration and automation of the day-to-day management
and operation of table gaming activity in casinos. In particular,
CasinoWare provides for the automation of all essential management
functions, including financial administration, scheduling, operations and
marketing, player tracking and floor layout. The tasks that the
Registrant's software is designed to automate are currently performed
manually in most casinos. Financial data is collected by hand and then
tallied manually using a calculator. Certain tasks incorporate a great deal
of subjective evaluation. Many casinos have implemented automated systems
to manage slot machine and hospitality (food and lodging) operations.
However, table games have been more difficult to incorporate into an
automated system in large part as a result of the need to record and track
the activity of dealers and players involved in table games whose activity
(unlike that of the slot machine player) does not involve providing input
to an electronic device. Certain casinos in gaming centers such as Las
Vegas are beginning to implement various methods of automation for table
games using main frame and mini computer systems. To the Registrant's
knowledge, full automation of all gaming operations has not yet been
achieved in any casino.
Automation of table gaming activity offers several advantages to the
casino operator. It provides management, both locally on the gaming floor
and elsewhere on or off the premises, with accurate, real time information
about gaming activities, allowing management to assess the efficiency of
each table, gaming pit area or casino and to make changes if and as
necessary. It offers several enhancements to security functions, allowing
management to identify sooner and more accurately any deliberate or
inadvertent failure to account for gaming transactions and any inaccurate
transfers of cash or chips. It allows accurate and efficient linkage with
casino personnel and accounting operations. Finally, it can provide an
automated system for determining floor layout and evaluating the probable
consequences of any change. Because the system operates with minimal human
interface, it reduces dead time characteristic of manual systems that
require the dealer to interrupt gaming activity to engage in manual
transactions and allows the dealer to spend more of his or her time
interacting with gaming patrons.
The Registrant has completed the conceptual, prototype, alpha testing
and beta testing stages of development and commenced preliminary marketing
activities in August 1995. The beta testing of CasinoWare consisted of the
installation of the CasinoWare system, including hardware, in an operating
casino with 27 gaming tables. The Registrant has submitted its system
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<F1> CasinoWare, CasinoSim, CasinoNet and CasinoCrypt are registered
trademarks of the Registrant.
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for review by the Nevada State Gaming Control Board (the "Gaming Board"),
and has received approval of the Gaming Board to conduct a 30-day field
trial of the system in a Nevada casino. The equipment was installed in this
casino as of May 13, 1996 and operational testing commenced on May 20,
1996. The test is expected to last approximately 30 days, after which
additional time may be required by the Gaming Board to evaluate field trial
results. Assuming satisfactory field trial results and approval of
commercial sales by the Gaming Board, the Registrant expects to commence
regular product sales upon completion of the Gaming Board's review and
approval process in July 1996. Certain related hardware products, including
an automated chip tray that works in conjunction with the CasinoWare system
to record chips placed in or removed from the tray, are also expected to be
ready for sale in September 1996.
The Registrant intends to lease its CasinoWare system to operators of
casinos and other gaming facilities, who can select certain software
modules or the full system, depending on need. Lease rates will depend on
the scope of the system selected, as well as on the number of tables
operated using the system. Although the basic elements of the CasinoWare
system are identical for all casinos and other gaming facilities, a certain
amount of custom design is expected to be required to accommodate
particular requirements of each customer, including interface requirements
with existing accounting and management systems. The Registrant also
anticipates earning some income from service and maintenance contracts
related to installed CasinoWare systems and may charge for significant
customization requirements of its customers.
Corporate History and Development. The Registrant was incorporated
under the laws of British Columbia on March 1, 1995, under the name
"Entertainment Research Technologies (B.C.) Inc." The Registrant changed
its name to "CSCC Casino Software Corporation" effective April 10, 1995.
The corporate office of the Registrant is located at 350-13775 Commerce
Parkway, Richmond, British Columbia. The Registrant's operations are
conducted by its wholly owned subsidiary, The Casino Software Corporation
of America ("CSCA"). CSCA was incorporated under the laws of the State of
Oregon on March 15, 1995. CSCA maintains a research and development
facility in Salem, Oregon and a marketing and sales facility in Las Vegas,
Nevada.
Preliminary development of the CasinoWare software concept was
accomplished by Great Canadian Casino Company Ltd., a British Columbia
corporation that operates seven casinos ("GCCC") and ERT West, Inc., an
Oregon corporation that offers industrial automation solutions ("ERT"). In
April 1995, GCCC and ERT organized the Registrant as a joint venture by
transferring to the Registrant all right, title and interest of GCCC and
ERT in and to the CasinoWare software system. See Item 7 of Part I. The
Registrant commenced business operations upon the organization of the joint
venture in April 1995. Since that time, the Registrant has further
developed the CasinoWare system, has pursued associated equipment approval
of the system by the Gaming Board and has engaged in certain preliminary
marketing activities in anticipation of the commencement of regular
products sales in July 1996. In February 1996, the Registrant completed a
public offering in Canada of 1,500,000 of its Common Shares, representing
approximately 21.5% of the outstanding Common Shares.
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The CasinoWare System. The CasinoWare system is designed to provide
solutions to the day-to-day management needs of the gaming industry by
providing an electronic data transmission and communications link among all
levels of casino personnel, from the dealers and floor supervisors to the
accounting personnel and upper management. The principal focus of
CasinoWare is a casino floor accounting system and a casino activity
management information system (MIS). CasinoWare is a suite of individual
program modules that allows complete integration and automation of the
management and operational functions of a casino. In order to access the
Internet for global communications and to communicate with other casinos
within the gaming community, a casino may use the Registrant's CasinoNet
program, which works in conjunction with CasinoWare.
Specifically, CasinoWare provides for employee identification and
verification at the individual gaming tables or other work stations. All
data collected from the employee use of the system, such as hours worked,
may be transmitted for processing to offsite payroll accounting firms. All
cash drop transactions at the individual gaming tables are recorded by
employees through an easy to use keypad and card reader. This information
is then transmitted to the floor supervisor for acceptance or refusal. The
system keeps a running total of all cash drop transactions made during each
employee's shift. Chip distribution is automated by the use of a computer
printer generated tally slip being used by each of the cashier, the dealers
and the floor supervisor. This data may be analyzed for use by financial
accounting programs to produce the required daily report forms as well as
being used for more complex accounting and statistical evaluation by higher
level management. All stored user data is encrypted using CasinoCrypt, the
Registrant's high technology data encryption program. By integrating the
various key management and operational functions through the CasinoWare
system, the users and managers will have access to a security controlled
information flow and a communication system that will greatly increase
individual productivity, thereby limiting interruptions in play and giving
individual dealers more time for interaction with gaming patrons.
The CasinoWare system also incorporates the use of an automatic
document "scanner" that allows the user to conduct customer demographic
tracking surveys and have the actual survey forms "scanned" into the
system. The CasinoWare system then compiles the results of such surveys and
produces any number of different reports summarizing the data obtained.
Each gaming table automated by CasinoWare has a card reader and a
keypad connected to an industry standard personal computer by way of an
RS232 connection. The CasinoWare data base is maintained on a single
centralized system with all personal computers connected to each other and
to the centralized system by way of an Ethernet network. The centralized
system communicates with all outlying personal computers and transfers
information to and from the data base. The physical connection between the
centralized system and each personal computer is accomplished using
Ethernet NIC's, connected via a T-base-10 connection. Data is transferred
at a rate of 10Mbps, conforms to the IEEE 802.3 standard and uses the
CSMA/CD protocol. The card reader is used to identify the employees, log
them in and out of the system and provide an accurate accounting of working
times. The keypad is used by the dealers to enter cash drop
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transactions or to signal supervisory or security personnel in the event of
an emergency situation at the table. The cash drop transactions are
transmitted to the supervisory floor personnel for acceptance or refusal.
The supervisor's system, located within each Gaming Pit, is used to access
this data, as well as to perform many other functions, including requesting
chip fills or credits from the individual tables. Using these features, an
accurate accounting of individual table liabilities of both chips and cash
transactions is immediately available to management for review upon demand.
This data may be used to assess table use, review working personnel and
provide a full analysis of any transaction at any time. Additional
transactions such as the amount of "complementaries" awarded to preferred
customers are also recorded. All data recorded may be transmitted between
the individual program modules of CasinoWare upon demand. This allows the
generation of required financial reports, analysis of time and activity and
statistical evaluation by upper level management. By integrating these key
functions through a computer system, the users and managers have access to
a complete information flow that greatly increases individual productivity
and saves time for other essential tasks.
The card readers and keypads used to collect data from the individual
gaming tables or systems are standard commercially available devices. The
Registrant's development staff is carrying out continued experimentation to
determine which of these standard devices most efficiently adapt to the
CasinoWare system and is further experimenting with the development of its
own custom keypads and card readers. The development staff has developed a
prototype of an automatic chip tray (to be called the CasinoWare Auto Chip
Tray), equipped with sensory devices, which will be connected to the
CasinoWare system and will automatically gauge the number of chips at the
individual gaming tables in real time. The Auto Chip Tray works with all
standard size round chips currently used by casinos. It is expected the
data generated by the automatic chip tray concerning counts of numbers and
types of chips will be shared electronically with the CasinoWare software.
All data recorded by licensed users of the CasinoWare system is
encrypted for that user by the Registrant's CasinoCrypt program.
CasinoCrypt is a high technology encryption program that provides a secure
framework which prevents unauthorized access to data generated by
CasinoWare. The Registrant's support staff can be granted on site or remote
access to all customer systems for the purpose of service and maintenance.
Remote access by support staff is tightly controlled and restricted. All
accesses are automatically recorded on the customer's system.
CasinoWare is composed of the following 16 program modules, each of
which may be used individually in a stand alone format or which may be
fully integrated with any or all of the other program modules:
Supervisors Module, Dealer Monitoring. This module provides the floor
supervisor with access to information regarding the chip status at each
individual gaming table, information regarding personnel working within
that supervisor's designated area and a report on all cash transactions and
other financial activity within the supervisor's designated area.
Supervisors and
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Dealers log on to the system using a card swipe. Supervisors may verify all
cash drop transactions and track all chip requests made by individual
dealers. Cash drop data collected with this module is verified by actual
drop box values. Chip requests, once entered into the system by the dealer,
are automatically printed out in the cage area, thereby removing the need
for manual generation of chip fill requests. Supervisors may verify
personnel working in designated areas by requesting that the system display
a photograph. Dealers may immediately communicate with Supervisors and
security personnel by use of the keypad in the event that emergency
assistance is required. Supervisors may request at any time full on-line
exact liabilities, profits and loss assessments for any individual table.
This module is the lowest level of data processing and communication and is
where the CasinoWare database begins.
Cashier/Chip Bankers Management Module. This module generates a
print-out of chip requests on approved forms and allows input by the
individual dealers, cashiers and chip bankers of "start of shift" and "end
of shift" chip totals and cash on hand, and cash drops during shifts. The
system will show at any time, on demand, the chip status on any individual
table, for any supervisory area, or for the total floor. Cashier and chip
banker personnel may be identified and verified, as above, by requesting
that the system display a photograph. This module is integrated into the
other CasinoWare modules and will generate reports acceptable for the use
of the regulatory agencies as well as for the immediate use of the
individual user.
Vault Management Module. This module supports drop box counting
functions within the vault. Drop boxes are counted for each gaming table
for each shift. Counts are entered into the system by authorized personnel
only. This module allows the counters to easily verify their counts and
resolve any out-of-balance situations. A direct interface to cash counting
devices commonly used in casinos is also supported. This direct interface
further increases the accuracy and speed of this counting process. Once the
counting is done for a shift, various reports are available to summarize
the win/loss position of individual gaming tables.
Casino Manager's Management Module. This module allows for the input
of general casino information including information and individual table
layouts, descriptions, locations, upper and lower limits and cash drop
limits. Specific personnel information may also be entered including
personal data, job description data, scheduling, personnel security
identification and scanned photographs. Managers may review on-shift
personnel or immediately locate any employee in any location on the floor.
Managers may, at any time, review or print interim reports which provide up
to the minute status reports of all tables, individual cash transactions,
and individual chip transactions. Reports may also be generated providing
up to the minute financial information and comparative analysis grouped by
any user selectable manner such as by individual tables, individual
dealers, individual games such as Blackjack or Roulette, or individual
supervisors. Reports generated may be immediately transmitted to executive
management. Access to this module may be regulated by the use of manager
passwords, due to the sensitive nature of the data produced. Through the
use of the Registrant's CasinoSim casino simulation program (which allows
the user to operate a virtual casino within cyberspace),
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managers may create hypothetical situations and compare hypothetical
results (based on proposed changes) with actual operating performance.
Head Office Management Module. This module allows complete access to
all existing user databases, including all financial information, inventory
records, personnel information, etc., and, if the user has multiple casino
sites, will provide access to all information from all individual sites. It
will allow for the generation of specialized government reporting forms and
will also transfer data directly, in any such required form, to
governmental agencies or other regulatory agencies, thereby allowing the
user an easy method of complying with regulatory reporting requirements
(any specialized government forms may also be generated using the Executive
Management Module). This module will also permit the use of CasinoSim to
create hypothetical situations to assess proposed operational changes and
to compare such hypothetical results with actual operating performance.
Users with multiple casino sites may generate reports which will analyze
and compare the financial information and operating results from each
individual site.
Executive Management Module. This module contains many of the features
in the Head Office Management module and also allows complete access to all
existing user databases within the users' respective casino sites. However,
this module is intended to be run "off-site" and users will not be
permitted to alter the actual databases at any time but rather may only
alter copies. Log files may be accessed which allow the user to assess
"down time" by other modules or by the system in general, service and
maintenance records and records of hardware replacement. This module also
permits the creation of hypothetical and actual operating results. Current
data is obtained by transfer from other modules. Hypothetical results
created by the use of CasinoSim may be transferred directly to head office
management. Full comparison of related data is easily accomplished through
the use of pull-down and pop-up window elements.
Market Research Management Module. This module allows for the
statistical analysis of user generated customer survey questionnaires.
Survey questions and forms are generated by the individual user and may be
individually tailored to suit the particular user's needs. Questions and
forms may be as simple or as complex as the user desires. Once completed by
the customer, the information compiled on the survey form may be input
directly into the system by the use of a full-page scanner. Data may then
be analyzed and reported on by the system for the use of the user.
Responses may be stored and later added to different surveys to demonstrate
changes in customer demographics or satisfaction over a stipulated period
of time. The full page scanner and associated software will report how many
total results were obtained and the total of each selection made.
Casino Inventory Management Module. This module allows the user to
maintain an accurate in-house inventory of selected equipment, supplies,
suppliers, etc. At any time, the user may access a complete record of
available stock or supplies on hand, project current usage rates and define
expected reorder dates based on estimated current usage. This module also
has tickler functions to alert management when additional supplies need to
be ordered based on projected
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lead times and expected usage rates. It may also be used to generate
purchase orders and vendor or supplier information for needed items
selected. This module is, in effect, a full inventory management system
modified specifically for casino usage.
Security Management Module. This module will provide a direct link
between dealers and other employees and security personnel and will allow
either of them to immediately alert such security personnel of emergency
situations or other conditions which warrant immediate attention. It may
also be used to control security cameras or alarms if desired. Dealer
performance may be evaluated, on request, by comparison of individual
dealer's cash drop transactions and table liabilities or by comparison of
such information with statistical probabilities. Security personnel may
access information from the Vault Management Module or the Chip Banker's
Module, for the purposes of examining any discrepancies, or cash or chip
irregularities. The module will also provide security personnel with
information regarding employees who were on-shift during the time the
discrepancies or irregularities occurred. Any records of the use of
management override functions may also be accessed.
Time and Attendance Management Module. This management module allows
the user to track employee work hours by the use of log-in/log-out times
and dates (recorded by the use of a card swipe) and will allow the user to
directly transmit relevant data to third parties performing off-site
payroll accounting functions. The module also tracks sick leave accrued and
taken and vacation entitlement accrued and taken. This module contains
complete records of all personnel, including date of hire, job description,
salary information, evaluations, etc. By each employee logging on and off
of the system as well as logging on and off of specific functions/devices
within the casino, actual work time, rest periods and time between duties
will be noted and logged for subsequent evaluation by casino management
staff.
Player Tracking Module. This module is used to track selected
individual players, noting length of play, player rating, date and time of
play and game. Full statistical analysis of individual players or groups of
players is available upon demand, with the entire database available for
promotional purposes. This module may be expanded to cover user definable
parameters as may be needed by any individual casino or group of casinos.
Headcount Module. This module allows player counts to be taken at
regular intervals and entered into the system. The system will then produce
a graph of table utilization split out by hours, day of week, seasonal
variation or any other variable the user wishes to introduce.
Complimentary Issuance Module. This module tracks and records
complementaries given out to preferred customers. It shows player
performance and keeps track of past complementaries received.
Complementaries may be of any value type, such as hotel suites, airline
tickets, food and beverage vouchers or show tickets and may be issued on
the spot by floor management personnel. This module allows users to
maintain accurate records of complementaries given, the players to whom
they are given and the floor personnel by whom they are given.
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Poker Management Module. This module allows the user to easily manage
activities for the poker room. It allows the poker manager to maintain a
waiting list of customers who wish to enter the game. The module also
tracks the movement of chips to and from the poker room. It tracks the
amount of "rake" generated from the poker room. This module is integrated
with the other CasinoWare modules in such a way that the poker room can be
managed as an integral part of the casino operations.
Accounting Audit Module. This module allows the accounting department
to easily audit the business results from table games operations. All chip
and cash transactions can be reviewed in an on-line mode. A number of
functions are available to assist the auditors to identify out-of-balance
situations. If necessary, adjustments can be made to any transactions.
However, all adjustments are tightly controlled and documented to maintain
proper security.
Markers Management Module. This module allows the user to manage the
approval, issuance and redemption of chip credits or markers on the casino
floor to select players. This module works in conjunction with the Player
Tracking Module and the Supervisor Module so that marker information is
tracked in real time and therefore allows for easy and accurate handling of
markers throughout the casino.
The CasinoWare system also incorporates proprietary and
"off-the-shelf" hardware, including the Registrant's proprietary Auto Chip
Tray and a variety of keypads, card readers and other computer products.
Hardware products being developed by the Registrant include the following:
Auto Chip Tray. The Auto Chip Tray product is designed for use at
individual gaming tables and will provide automated counting and
recognition of chip values. The Auto Chip Tray will be integrated with the
CasinoWare system so the data it generates can be automatically transmitted
to any number of the CasinoWare modules. The Registrant currently has an
unlinked, unintegrated prototype of the Auto Chip Tray. The Registrant
estimates its development cost with respect to the Auto Chip Tray product
will be approximately $100,000.
Custom Keypads and Card Readers. The Registrant is pursuing
development of its own custom keypads and card readers to be used in
conjunction with its CasinoWare system. All further research and
development will be carried out by the Registrant's development staff,
located at the CSCA office in Salem, Oregon. The Registrant has developed a
prototype of both a custom keypad and a custom card reader and expects
these devices to be ready for sale in December 1996.
Stage of Development. The Registrant has completed the conceptual,
prototype, alpha testing and beta testing stages of development and
commenced marketing the CasinoWare product in August of 1995. The beta
testing of CasinoWare consisted of the installation of the CasinoWare
system, including hardware, into an operating casino with 27 gaming tables.
The hardware installed included five supervisor's systems, one vault
system, one chip bank system
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and one manager's system all connected via the Novell Network. The system
was operated for several months with constant improvements and refinements
being made to both the software and the hardware. The end result of the
beta testing was that CasinoWare reached a state of stability where the
data generated was consistent with the existing manual system. An
additional test installation has been made in one casino in Las Vegas,
Nevada and a 30-day test of that system commenced May 20, 1996. The test
has been approved by the Gaming Board and is undertaken as a part of the
Gaming Board's evaluation of the system.
The core modules of CasinoWare namely the Supervisors Module,
Cashier/Chip Bankers Management Module, Casino Manager's Management Module
and Security Module are complete and in an immediately installable and
usable form. The other modules are available in a form that will require
additional customization to adapt them to the individual user's hardware
systems. To date, the Registrant has made no commercial sales of the
CasinoWare product.
The Registrant has completed preparation of system manuals for all
CasinoWare modules, which will be provided to users of the CasinoWare
system. The core system modules are designed to require little or no
documentation due to the user-friendly touch screen format. As individual
CasinoWare users may have a number of different system configurations
depending on the number of CasinoWare modules they are using, individual
user documentation will be prepared on a system by system basis. The
Registrant estimates that such individual user documentation will require
approximately two weeks to prepare at a cost to the individual user of
approximately $2,000.
Sales and Marketing Plan. The Registrant is entering a high growth
market in which competition among its potential customers is increasing for
available gaming dollars. Growth over the last five years in the number and
size of gaming facilities, both in North America and throughout the world
has been rapid and the industry predicts continued growth. As the number of
gaming institutions increases, individual gaming facilities become more
conscious of competition and of the need to become more efficient in
management functions and in operations on the gaming floor. Access to
immediate and reliable data can improve management effectiveness, enhance
security and control functions and increase employee productivity, thus
improving results of operations. Additionally, increasing governmental
mandates and monitoring of the casino industry may increase the need for
immediate and reliable data reporting.
The Registrant commenced active marketing of CasinoWare in August of
1995 by beginning its distribution of promotional materials, product
brochures and literature. CasinoWare will be marketed as a state of the
art, high quality management information system developed solely for gaming
operations.
The Registrant's marketing plan will emphasize the interactive
management functions offered by CasinoWare and comprehensive product and
system support, including support of contracts with established suppliers
of computer related casino based games and devices, ongoing consulting and
product support services with respect to casino operations and systems and
on-site
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maintenance personnel. All product warranty, upgrades, service and repair
and maintenance requirements will be included in the lease agreement with
the customer. CasinoWare customers will be trained in the use of the system
by members of the Registrant's staff. Turn key system installations and
operating platforms will be supported and maintained by members of the
Registrant's staff. The Registrant will also provide on-site maintenance
personnel available 24-hours a day, seven days a week, with response times
suitable to individual customer management.
The Registrant believes that a high level of service and support is an
essential element of its marketing strategy. The Registrant is developing
internal procedures consistent with ISO 9000 procedures and quality
standards and expects to apply for ISO 9000 certification within the next
two years. Following ISO 9000 procedures will ensure a consistent
definition of the product supply and service provided by the Registrant and
will ensure consistent quality of service and customer communication.
Emphasis of field operations will be placed on on-line diagnostics,
reliability and support. The Registrant will also provide support for
existing casino computing systems, which are not directly related to gaming
activities. The Registrant intends to pursue business relationships with
leading suppliers of computer related casino based games and devices, and
will further provide support services and consultancy with respect to
casino operations and systems.
CasinoWare will not be sold but rather will be leased to customers on
a site license basis. The Registrant's market research indicates that most
casinos prefer to license rather than purchase operational equipment. It is
expected that site licenses will have a term of five years and will entitle
the licensee to certain upgrades and enhancements as developed by the
Registrant during the license term. License fees are expected to consist of
an initial fee designed to offset installation costs and a monthly fee. The
actual cost to the customer will depend on a number of factors including
the number of modules the customer wishes to incorporate into its
operations, the number of gaming tables the customer operates and the
existing hardware operated by the customer. The Registrant estimates that
the average cost per day, per table, will be $10-18 (US), exclusive of
initial application fees.
The Registrant currently intends to offer systems addressing table
games only. Several systems supporting slot machine, and food and lodging
aspects of casino operations are commercially available and in use at many
casinos. The Registrant does not believe that limiting its business to the
table game market will constitute a material impediment to its sales and
marketing activities under current market conditions. However, where
appropriate, the Registrant may engage in joint marketing activities or
enter into joint venture arrangements with providers of other management
and operations support software for the Casino industry. The Registrant has
had informal discussions with respect to such projects but has no formal
arrangement with respect to any such joint effort. The Registrant also
expects to engage in joint development and marketing projects with
manufacturers of hardware products with gaming applications in areas in
which such development could enhance the effectiveness of the CasinoWare
system. The Registrant has entered into a joint development with Shuffle
Master Gaming Inc., a manufacturer of multi-deck shuffling machines and
other gaming hardware, under
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which the two companies will jointly develop gaming management systems and
may enter into similar arrangements with other companies with synergistic
technologies or markets. There is no assurance that the Registrant will be
able to enter into additional joint marketing or development arrangements
or that any such arrangements will be beneficial to the Registrant.
The Registrant has entered into a lease agreement dated July 1, 1995
with GCCC of Richmond, British Columbia pursuant to the terms of which the
Registrant will install the CasinoWare system in seven of GCCC's casino
sites. Under the lease agreement, GCCC is required to pay the Registrant
$5,500 per month for each installed site throughout the term of the
agreement, which terminates October 2000. Due to the Registrant's current
focus on its Nevada field trial for Gaming Board approval and following
commercial sales, the installation in the seven GCCC sites is in abeyance,
and the Registrant and GCCC will renegotiate the terms of the current lease
agreement for CasinoWare. The Registrant and GCCC are related parties
because of GCCC's ownership of a significant equity interest in the
Registrant and the presence on the Registrant's board of certain officers
and directors of GCCC. See Item 7 of this Section I. The Registrant is in
negotiations with casinos in Nevada and California with respect to
additional leases and installations of the CasinoWare system. These
negotiations are at a preliminary stage but the Registrant may secure some
initial "try-out" contracts in the near future. The Registrant is pursuing
long term contracts with these casinos but there is no assurance that any
such long term contracts will be entered into in the near future or at all.
The Registrant currently employs a sales manager and a customer
project manager, both of whom work out of the Registrant's Nevada office
and has retained an Executive Vice President -- Marketing and Sales, who
will become a full-time employee of the Registrant effective June 1, 1996.
The Registrant anticipates that demand for the system will increase once
the Registrant's marketing plans have been fully implemented. Accordingly,
the Registrant intends to hire additional sales personnel to work out of
the Nevada office.
The Registrant expects to provide some service support by contracting
with outside vendors. CSCA has entered into an agreement with ComputerHelp
Resources Inc. ("ComputerHelp"), whereby ComputerHelp will provide on-site
technical, service and maintenance assistance exclusively in British
Columbia. Pursuant to the agreement, ComputerHelp will provide support for
networks and communications, applications and software, provide maintenance
for hardware, and provide and install a remote access, backup and alert
notification system. The agreement extends to all future sites in Canada
where CasinoWare is installed, if any. The Registrant has agreed to pay
ComputerHelp a fee of $1,200 (US) per month for each site in Canada where
CasinoWare is installed. The cost of ComputerHelp's services will be
included in the lease payments made by the individual CasinoWare users. The
Registrant does not currently have any similar agreement in place for the
provision of technical, service and maintenance support to CasinoWare users
in the U.S. or elsewhere but may enter into comparable arrangements in the
future.
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The Registrant's focus will be on the supply of quality software to
the customer, system support, ongoing training in the use of the system and
integration. The Registrant will assess the customer's existing computer
equipment to determine whether it is suitable for use with the CasinoWare
system and will further assist the customer in specifying the standard
personal computer components the customers may purchase themselves. If
requested, the Registrant will also arrange for leases to the customer of
required hardware. In order to accomplish this, the Registrant will itself
lease required hardware and will then sublease same to the customer. In
this regard, the Registrant has entered into a lease agreement with
National Equipment Leasing Ltd. ("NELL") whereby it has leased from NELL
certain hardware components for a period of 39 months, in consideration for
the payment of $1,379.40 per month. All of these hardware components are
available for sublease to customers. The customer will be required to
guarantee the Registrant's main lease with NELL. Payments pursuant to the
sublease will be incorporated into the customer's overall lease program.
Either the Registrant or the customer may depreciate the leased equipment.
Government Regulation. The Registrant, as well as the CasinoWare
system and related products for sale or use by the licensed gaming
industry, will be subject to regulation by state and local regulatory
authorities in most jurisdictions in the United States and Canada. The
gaming regulatory requirements vary from jurisdiction to jurisdiction, and
the licensing, approval, or finding of suitability processes with respect
to the Registrant, its directors, officers, shareholders, and products can
be lengthy and expensive. Generally, state and local gaming regulatory
authorities may deny applications for licenses, other approvals or findings
of suitability for any cause they deem reasonable. There can be no
assurance that the Registrant, CSCA, their directors, officers,
shareholders, and products will receive or be able to maintain any
necessary gaming licenses, other approvals, or findings of suitability.
The Registrant's CasinoWare system and related products are typically
classified by the Nevada Gaming Control Act (the "Nevada Act"), as
"associated equipment". Associated equipment is any mechanical,
electromechanical, or electronic component, equipment, or machine, not
classified as "gaming devices," that are used remotely or directly in
connection with licensed gaming activities. The Nevada Act provides that
the Nevada Gaming Commission (the "Nevada Commission"), on the
recommendation of the Gaming Board, has the discretion to require
manufacturers and distributors of associated equipment to file an
application for a finding of suitability and thereafter be found suitable
to engage in this business. A finding of suitability is comparable to
licensing, and both require submission of detailed historical, business,
and financial information about the applicant. If the applicant is a
corporation, partnership, or other business organization, such as the
Registrant and CSCA, the applicant must furnish similar information about
the directors, officers, key employees, and shareholders of that business
organization. The applicant is required to pay all the costs incurred by
the Gaming Board in investigating an application. Any finding of
suitability granted by the Nevada Commission may be limited or conditioned,
including the imposition of specific operating standards or further
reporting requirements, and thereafter the Nevada Commission may further
limit, condition, or
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suspend or revoke the suitability determination for any cause deemed
reasonable by the Nevada Commission.
The Nevada Act and the Regulations of the Nevada Commission also
provide that generally associated equipment, such as the Registrant's
CasinoWare system cannot be distributed without the prior approval of the
Chairman of the Gaming Board, which requires the filing of a detailed
application, and the completion by the Gaming Board of such laboratory
evaluation and field trial of the associated equipment as required by the
Chairman of the Gaming Board. Regulations of the Nevada Commission state
that licensed casinos may not install or use new types of associated
equipment, or alter the operation of previously authorized associated
equipment, without prior written approval of the Chairman of the Gaming
Board.
The Gaming Board has completed a limited evaluation of the
Registrant's CasinoWare system and issued a written determination that the
system is suitable for installation for a minimum 30-day field trial. The
Gaming Board has also advised the Registrant that upon successful
completion of the field trial, approval of the CasinoWare system as
associated equipment for use in Nevada may be provided by the Gaming Board.
Similar approvals or licenses may be required before the Registrant
may distribute the CasinoWare system in other jurisdictions. There can be
no assurance that the Registrant will be granted the licenses or approvals
necessary to manufacture and distribute the CasinoWare system by gaming
regulatory authorities in Nevada or such other jurisdictions. Moreover,
gaming authorities in the various jurisdictions where the Registrant might
distribute its products have broad authority to limit or disallow the use
of gaming associated equipment and to grant or deny the right of a
particular vendor, such as the Registrant or CSCA, to manufacture,
distribute, service or operate such equipment within its jurisdiction.
The Federal Gaming 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 across state
lines or to operate gaming machines unless that person has first registered
with the Attorney General of the United States, thereafter maintains annual
renewals of such registration and complies with various record keeping and
equipment identification requirements imposed by the Federal Act.
Violations of the Federal Act may result in seizure or forfeiture of the
equipment, as well as other civil and criminal penalties. The Registrant
does not believe that the Federal Act applies to the manufacture, sale,
distribution or operation of computer software such as the CasinWare
system. As the Registrant develops related and new products, management
will evaluate the need to comply with the Federal Act, and vigilantly
comply with the Federal Act, if required.
Additional Nevada Regulatory Requirements. The Registrant's management
is currently assessing whether to file with the Nevada Gaming Authorities
(herein defined), applications for registration, licenses and related
approvals as a manufacturer and distributor of gaming devices. Applying for
and obtaining such registration, licenses and approvals may be advantageous
to, or
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required of, the Registrant in order to develop and sell new products that
may be considered "gaming devices," instead of "associated equipment" as
those terms are defined by the Nevada Act, and similar gaming laws in other
jurisdictions.
If the Registrant and its subsidiary company apply for and obtain
gaming device manufacturer's and distributor's licenses, company
registration and related approvals, the Registrant and CSCA will be subject
to additional state and local regulation by the Nevada Commission, the
Gaming Board, and various city and county regulatory agencies (the "Local
Government Boards" and together with the Nevada Commission and Nevada
Board, the "Nevada Gaming Authorities"), as summarized herein. Nevada's
gaming laws, regulations and supervisory procedures are extensive and seek
to (i) prevent unsavory or unsuitable persons from having any direct or
indirect involvement with gaming at any time or in any capacity; (ii)
establish financial practices of licensees, including establishing minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record-keeping, and making periodic reports to
the applicable casino gaming authority; (iii) prevent cheating and
fraudulent practices; and, (iv) provide a source of state and local
revenues through taxation and licensing fees.
For the CSCA to obtain manufacturer's and distributor's licenses, the
Registrant would be required to become registered with the Nevada
Commission as a publicly traded corporation and be found suitable as a
holding company by the Nevada Gaming Authorities to own all of the
outstanding capital stock of such subsidiary. The Registrant's subsidiary
company would be required to apply for and obtain manufacturer's and
distributor's licenses. If licensed, no person could become a shareholder
of CSCA without first obtaining certain required licenses and approvals
from the Nevada Gaming Authorities. After licensure, prior approval from
the Nevada Commission is required for the sale, assignment, transfer,
pledge or other disposition of any securities issued by CSCA.
The Nevada Gaming Authorities may investigate any person who has a
material relationship to, or material involvement with the Registrant or
CSCA once these companies file an application and if registered, licensed
and approved as a manufacturer and distributor of gaming devices, to
determine whether such person is suitable or should be licensed as a
business associate of the Registrant or CSCA. Officers, directors and key
employees of CSCA must be individually licensed by, and changes in
corporate positions must be reported to, the Nevada Gaming Authorities. The
Nevada Gaming Authorities may disapprove a change in corporate position.
Certain officers, directors and key employees of the Registrant who are
actively and directly involved in the gaming activities of CSCA may be
required to be licensed or found suitable by the Nevada Gaming Authorities.
The Nevada Gaming Authorities may deny an application for registration,
licensing, a finding of suitability or other approval 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 registration,
licensing, a finding of suitability or other approvals must pay all of the
costs of the investigation.
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If the Nevada Gaming Authorities find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Registrant or CSCA, the companies involved would be
required to sever all relationships with such person. In addition, the
Nevada Gaming Authorities may require a registered company or licensee to
terminate the employment of any person who refuses to file appropriate
disclosures.
Once registered and licensed, the Registrant and CSCA, respectively,
are required to submit detailed financial and operating reports to the
Nevada Gaming Authorities. If licensed, substantially all loans, leases,
sales of securities and similar financing transactions by or for the
benefit of CSCA must be reported to or approved by the Nevada Commission.
Nevada law prohibits a corporation registered by the Nevada Commission from
making a public offering of its securities without the prior approval of
the Nevada Commission if any part of the proceeds of the offering or the
securities themselves are to be used either to (i) finance the
construction, acquisition or operation of gaming facilities in Nevada; or,
(ii) retire or extend obligations incurred for one or more such purposes.
If after registered and licensed, it is determined that Nevada gaming
laws were violated by the Registrant or CSCA, the gaming registrations,
licenses and related approvals held could be limited, conditioned,
suspended or revoked. In addition, at the discretion of the Nevada
Commission, the Registrant, CSCA, and the persons involved could be subject
to substantial fines for each separate violation of the Nevada gaming laws.
If the Registrant and CSCA were registered and licensed, any suspension or
revocation of the Registrant's registration or CSCA's licenses would have a
materially adverse effect on the Registrant and CSCA.
If the Registrant applies for and is registered by the Nevada
Commission, the Nevada Gaming Authorities may investigate and require a
finding of suitability of any holder of any class of the Registrant's
voting securities or debt securities at any time. Nevada law requires any
person who acquires more than 5% of any class of the Registrant's voting
securities to report the acquisitions to the Nevada Commission and such
person may be investigated and found suitable. Any person who becomes a
beneficial owner of more than 10% of any class of the Registrant's voting
securities must apply for a finding of suitability by the Nevada Commission
within 30 days after the Gaming Board Chairman mails a written notice
requiring such filing, and must pay the costs and fees incurred by the
Gaming Board in connection with the investigation. Under certain
circumstances, an "institutional investor," as such term is defined in the
regulations of the Nevada Commission, who acquires more than 10%, but not
more than 15%, of the Registrant's voting securities, may apply to the
Nevada Commission for a waiver of such finding of suitability requirements
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 Registrant, and change in the Registrant's corporate
charter, bylaws, management, policies or operation of the Registrant or any
of its gaming operations, or any other action which the Nevada Commission
finds to be
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inconsistent with holding the Registrant's voting securities for investment
purposes only. Notwithstanding the foregoing, activities that 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 stockholder who must be found suitable
is a corporation, partnership or trust, it must submit detailed business
and financial information, including a list of beneficial holders.
Any person who fails or refuses to apply for a finding of suitability
or a license within 30 days after being ordered to do so by the Nevada
Commission or by the Chairman of the Gaming Board may be found unsuitable.
Any holder of any equity or debt security found unsuitable and who holds,
directly or indirectly, any beneficial ownership of the Registrant's debt
or equity voting securities beyond such period or periods of time as may be
prescribed by the Nevada Commission may be guilty of a gross misdemeanor.
The Registrant could be subject to disciplinary action if, without the
prior approval of the Nevada Commission and after the Registrant receives
notice that a person is unsuitable to be an equity or debt security holder
or to have any other relationship with the Registrant or CSCA, it either
(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; (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction; or, (v) fails to pursue all lawful
efforts to require such unsuitable person to relinquish his securities
including, if necessary, the immediate purchase of such securities for cash
at fair market value.
Regulations of the Nevada Commission provide that control of a
registered publicly traded corporation cannot be changed through merger,
consolidation, acquisition of assets, management or consulting agreements,
or any form of takeover without the prior approval of the Nevada
Commission. Persons seeking approval to control a registered publicly
traded corporation must satisfy the Nevada Commission as to a variety of
stringent standards prior to assuming control of such corporation. The
failure of a person to obtain such approval prior to assuming control over
the registered publicly traded corporation may constitute grounds for
finding such person unsuitable.
Regulations of the Nevada Commission also prohibit certain repurchases
of securities by registered publicly traded corporations without the prior
approval of the Nevada Commission. Transactions covered by these
regulations are generally aimed at discouraging repurchases of securities
at a premium over market price from certain holders of more than 3% of the
outstanding securities of the registered publicly traded corporation. The
regulations of the Nevada Commission also require prior approval for a
"plan of recapitalization," as such term is defined in the Nevada
regulations. Generally, a plan of recapitalization is a plan proposed by
the management of a registered publicly traded corporation that contains
recommended action in
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response to a proposed corporate acquisition opposed by management of the
corporation, which acquisition itself would require the prior approval of
the Nevada Commission.
Pursuant to recent changes in Nevada law, the Registrant and CSCA may
engage in gaming activities outside Nevada without seeking the approval of
the Nevada Commission, provided that such activities are lawful in the
jurisdiction where they are to be conducted and that certain information
regarding the foreign operation is provided to the Gaming Board on a
periodic basis. The Registrant may be disciplined by the Nevada Commission
if it knowingly violates any laws of the foreign jurisdiction pertaining to
the foreign gaming operation, fails to conduct the foreign operation in
accordance with the standards of honesty and integrity required by Nevada
gaming operations, engages in activities that are harmful to the state of
Nevada or its ability to collect gaming taxes or fees, or employs a person
in the foreign operation who has been denied a license or finding of
suitability in Nevada on the ground of unsuitability.
Patents and Proprietary Information. CSCA has applied for a patent
covering certain aspects of its technology and generally seeks to protect
its proprietary technology by seeking patent and copyright protection where
appropriate and through an ongoing policy of internal security. All
employees of the Registrant and others with access to the Registrant's
proprietary technology are required to execute confidentiality agreements.
The Registrant relies on statutory and common law trademarks and intends to
secure further trademark protection of a number of its trade names,
including CasinoCrypt, CasinoSim, CasinoNet and its corporate logo. The
protection of proprietary information is an uncertain process and there is
no assurance that any effort the Registrant may make to protect its
technology will afford meaningful protection from competition.
Competition. Market research conducted by the Registrant indicates
that there is currently a substantial demand within the gaming industry for
industry standard, flexible management information and communication
systems. There are relatively few management information systems currently
available and existing systems lack the flexibility that individual
management demands. Many existing systems do not address, or do not
adequately address, table gaming. Other companies currently producing
casino related software include Logic and Gaming Systems, Logical Solutions
International, International Game Technology, Casino Data Systems, Gaming
Systems International and Mikohn Gaming Corporation. Many of these
companies, and many other companies capable of competing with the
Registrant have greater financial resources and name recognition than does
the Registrant. Moreover, a number of these companies currently offer
products relating to other aspects of casino operations, such as slot
machines and food and lodging services and therefore have established
relationships with operations and information systems management personnel
at many of the Registrant's potential customers. However, to the
Registrant's best knowledge, existing competitive software products usable
in connection with table games focus on player tracking, rather than
management systems or accounting for gaming table activity and focus on
historical data entry rather than real time transaction tracking.
CasinoWare is based on gaming operations and focuses on real time activity
but lacks the ability to track certain functions such as slot activity and
progressive games. All of the companies listed
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above, as well as many potential competitors are active in the data systems
area of the gaming industry, and have adequate resources to develop systems
that can emulate the "table tracking" and "employee tracking" features of
CasinoWare.
Risk Factors. An investment in the Common Shares being registered
hereby involves a high degree of risk. Potential investors in the Common
Shares should consider, among other things, the following factors relating
to the Registrant's business and present stage of its development:
History of Operating Losses; Future Profitability Uncertain. The
Registrant has not yet achieved material revenues from product sales and,
since its inception, has operated at a loss. As of March 31, 1996, the
Registrant had incurred a cumulative loss from inception of $1,971,173.<F2>
The Registrant expects that losses will continue at least through the rest
of 1996. There is no assurance that the Registrant will ever achieve
significant product sales or profitable operations. The likelihood of the
long-term success of the Registrant must be considered in light of the
expenses, difficulties and delays frequently encountered in the development
and commercialization of any new product.
Limited Capital Resources. Based on its current operating plan, as of
March 31, 1996, the Registrant had sufficient capital resources to continue
budgeted operations through June 1996. The completion of product
development and the required ramp-up of sales and marketing activities
required as the Registrant prepares to commence sales activities will
require substantial additional capital resources. The Registrant has
retained an investment bank and is preparing to offer additional equity to
selected industry and other institutional investors but there is no
assurance that any such investors will elect to invest in the Registrant or
that the Registrant will be able to raise the required capital. The failure
to obtain the required capital would have an immediate and adverse effect
on the Registrant's ability to pursue its business plan. Any additional
financing activities could result in dilution to the existing shareholders.
Competition. Many companies in the software industry have far greater
technological, financial, marketing and other resources than those of the
Registrant. Such companies are competing and others may choose to compete
with the Registrant in the casino software market. Such competitors may be
able to institute and sustain price wars, or imitate the features of the
Registrant's products, resulting in a reduction of the Registrant's
potential market share and reduced prices and margins. With the exception
of product development lead times and the existence of significant
regulatory requirements, there are no significant barriers to competition
in the Registrant's market. The Registrant has a limited operating and
financial history. Other companies which have longer operating histories,
greater financial and technical resources and larger marketing
organizations than that of the Registrant, operate within the same industry
and
- -------------
<F2> Unless otherwise indicated, all dollar amounts referred to herein are
expressed in Canadian dollars.
21
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will pose the most significant competition to the Registrant. Competition
in the casino software industry is expected to be on the basis of
technological proficiency, responsiveness of offered products to market
needs, the quality of service and support, price and name recognition. The
software industry is characterized by a consistent flow of new or improved
products which render existing products obsolete. To remain competitive,
the Registrant will be required to upgrade and improve its software
products. The Registrant will also be required to establish a high quality
service and support program and to achieve favorable name recognition.
There is no assurance that the Registrant will succeed in establishing
itself as a principal competitor in its market.
Limited Experience of Management; Management of Growth. Although
certain officers and directors of the Registrant are experienced in
industrial automation and in the gaming industry, generally, management of
the Registrant has limited experience with respect to casino related
software products and with respect to the provision of services to the
casino industry. There is no assurance that the Registrant has or will be
able to attract employees with the required skill and experience to sustain
a growing level of commercial operations. The Registrant's ability to
manage its growth, if any, will require it to continue to improve and
expand its management, operational and financial systems and controls. If
the Registrant's management is unable to manage growth effectively, the
Registrant's business and results of operations will be adversely affected.
The Registrant is also considering the expansion of its business through
acquisition of additional businesses or technologies. Although the
Registrant has no firm agreements with respect to any such substantial
acquisition, the success of any such project will require the rapid and
effective integration of the acquired resources into the Registrant's
business. There is no assurance that the Registrant will be successful in
incorporating such new resources.
Need to Provide Service and Support to Customers. The Registrant must
provide adequate support of its software and hardware products if it is to
have any realistic prospect of making substantial sales in the United
States and elsewhere. The Registrant currently employs its own support
personnel but may at times require additional support staff. The Registrant
has entered into an agreement with ComputerHelp Resources Inc.
("ComputerHelp") whereby ComputerHelp will provide on-site technical,
service and maintenance support to CasinoWare users in Canada. The
Registrant has not entered into any such agreement with respect to support
for CasinoWare users in the U.S. or elsewhere. In this regard, the
Registrant may need to locate and contract with firms in the U.S. and
elsewhere which supply such support. The Registrant is working with IBM in
connection with its Nevada field trial with a view to arranging for IBM to
provide hardware support to the Registrant's customers worldwide. However,
there is no assurance that IBM or any other support provider will be
available to the Registrant, on favorable terms or at all. Delays in
establishing adequate technical support and hardware maintenance will have
a negative effect on operating results.
Significant Regulatory Approval And Oversight Requirements. The
Registrant, as well as the CasinoWare system and related products for sale
or use as associated equipment by the
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licensed gaming industry, will be subject to regulation by state and local
regulatory authorities in most jurisdictions in the United States and
Canada. The gaming regulatory requirements vary from jurisdiction to
jurisdiction, and the licensing, approval or finding of suitability
processes with respect to the Registrant, its directors, officers,
shareholders, and products can be lengthy and expensive. Generally, state
and local gaming regulatory authorities may deny applications for licenses,
approvals, or findings of suitability for any cause they deem reasonable.
There can be no assurance that the Registrant, its directors, officers,
shareholders, and products will receive or be able to maintain any
necessary licenses, approvals, or findings of suitability necessary to
manufacture and distribute its products. See Item 1 -- Description of
Business -- Government Regulation.
Licenses for Gaming Device Manufacturer's and Distributor's. The
Registrant and CSCA may apply to the Nevada Gaming Authorities for
registrations, licenses and related approvals to manufacture and distribute
gaming devices if the Registrant's management determines that such
registrations, licenses and approvals are advantageous to, or required of,
the Registrant and CSCA in the development of new products for sale to the
licensed gaming industry. Similar registrations, licenses, findings of
suitability and related approvals may be in the Registrant's best interest
or required by local law in other jurisdictions where the Registrant elects
to conduct business. No assurances can be given that such registrations,
licenses, findings of suitability and approvals will be obtained or can be
maintained once obtained. See Item 1 -- Description of Business --
Additional Nevada Regulatory Requirements.
Investigation of Certain Shareholders. Any beneficial owner of the
Registrant's Common Stock or holder of any debt security issued by the
Registrant may be subject to investigation by the Nevada Gaming Authorities
and similar gaming regulatory agencies in most jurisdictions if such
authorities have reason to believe that such ownership may be inconsistent
with the state's public policy concerning the regulation and control of
licensed gaming. Persons who acquire beneficial ownership of more than
certain designated percentages of the Common Stock may be subject to
certain reporting and qualification procedures. See Item 1 -- Description
of Business -- Additional Nevada Regulatory Requirements.
Dependence on Key Personnel. The Registrant is substantially dependent
on the management abilities of its current officers and directors. The
Registrant has not obtained "key-man" insurance on the life of any of its
executive officers. The loss of the services of any of these personnel
could have a material adverse on the ability of the Registrant to complete
its operating plan.
Possible Volatility of Common Share Price. The Registrant's Common
Shares have been traded on the Vancouver Stock Exchange since February,
1996. Both the number of shares available to the public and historical
trading volumes indicate that a relatively minor change in demand for the
Common Shares could have a significant affect on their price. The trading
price of the Common Shares could be subject to significant fluctuations in
response to such factors as variations in the Registrant's anticipated or
actual results of operations or announcements of new
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products or technological innovations by the Registrant or its competitors.
Moreover, stock markets have from time to time experienced extreme price
and volume fluctuations that have particularly affected the market prices
for emerging growth companies and which have often been unrelated to the
operating performance of such companies. Such fluctuations, if they
occurred, could be expected to affect the price of the Common Shares. In
the past, following periods of volatility in the market price of a
company's common stock, securities class action litigation has occurred
against the issuing company. There is no assurance that such litigation
will not occur in the future with respect to the Registrant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of financial condition, results
of operation, and plan of operations should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere in
this form 10-SB.
General
Effective April 11, 1995, the Registrant entered into an agreement
with Great Canadian Casino Company Ltd. and ERT West Inc., both of which
are related by way of directors in common, under which it purchased all
rights, title and interest in and to the CasinoWare software system. The
consideration paid for this asset, representing the costs incurred by the
vendors in the development of this asset, consisted of 1,062,390 common
shares at a deemed value of $265,597.
Since the acquisition of CasinoWare, at which time the Registrant
commenced business operations, the Registrant spent an additional
$1,249,588 in further development of CasinoWare and related products. The
Registrant has completed the conceptual, prototype, alpha testing and beta
testing stages of development and commenced marketing the CasinoWare
product in August 1995. Pursuant to an agreement with Great Canadian Casino
Company under which the Registrant plans to install the CasinoWare into
seven of the casino sites of Great Canadian Casino Company, the Registrant
has completed its beta testing at the initial casino site located in
Richmond, British Columbia, Canada. This beta testing consisted of the
installation of the CasinoWare system, including hardware into an operating
casino with 27 tables. Installation at the other six sites could be
completed subsequent to approval by the British Columbia Gaming Commission.
The Registrant has recently received approval from the Gaming Board
for a 30-day field trial installation of CasinoWare at Mahoney's Silver
Nugget located in Las Vegas, Nevada, which commenced on May 20, 1996. This
field trial and final associated equipment approval by the Gaming Board is
required prior to commercial sales and use of the product in Nevada.
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In addition to development of CasinoWare, a patent application by The
Casino Software Corporation of America, the U.S. Subsidiary, has been
accepted by the U.S. Patent office for the automated chip counting tray.
The Registrant's products, which are under continuous development and
improvement, address significant global casino markets. While there is an
opportunity for these products to generate substantial sales and profits,
the success of the products depends on factors such as meeting the
requirements of the gaming authorities, the products' ability to reduce
overall casino costs and to improve quality of the casino management
information systems. To date, the Registrant has had no commercial sales of
the CasinoWare product. The Registrant operates in an environment which is
characterized by long lead times in product development and testing and a
regulatory process which is strictly administered by various governments
and beyond the control and influence of the Registrant. The uncertainties
associated with obtaining approval to market the Registrant's products in
any or all jurisdictions worldwide will impact the timing and certainty of
product revenues. This uncertainty has been lessened by the Registrant's
progress in the approval process in Nevada.
Year Ended March 31, 1996
Results of Operations. Operating results for the year ended March 31,
1996 reflect the software development, beta testing and product
registration process. During the year, beta testing at the initial Great
Canadian Casino Company location was completed. In addition, an agreement
was reached with Mahoney's Silver Nugget in Las Vegas to commence a Gaming
Board sanctioned field trial using their location. It is expected that
these field trials will continue during fiscal 1997.
The Registrant's total operating expenses were $2,173,327 for the
initial year ending March 31, 1996.
The largest component of operating expenses was research and
development expense incurred by the Registrant in carrying out it product
development program. Research and development expenses consist primarily of
salaries and benefits and consulting fees paid to research and development
personnel, representing approximately 66% or $826,994 of total research and
development expenses.
The Registrant has been active in marketing its products to the casino
community from its sales and marketing base in Las Vegas. Major marketing
activities have included a presentation and demonstration booth at the
World Gaming Exposition in October 1995 and the International Gaming
Business Exposition in March of 1996, and the hiring of senior marketing
personnel to manage the sales function in anticipation of the approval for
use in Nevada from the Gaming Board, as well as sales in other
jurisdictions. Included in prepaid expenses is $17,066 related to the
October 1996 World Gaming Exposition and the ATE Exposition in London in
January 1997.
25
<PAGE>
The Registrant has incurred operating losses in fiscal 1996 as a
result of its investment in intellectual property rights and product
development and in its initial marketing efforts. The Registrant
anticipates an operating loss for fiscal 1997 as its products move through
the product development life cycle.
Revenue
Sales revenues of $202,154 include activity related to an agreement
with Great Canadian Casino for the Registrant to install CasinoWare into
its casino sites. To date the Registrant has installed the system into one
casino site under this agreement and no other sales have been generated
during the initial year ended March 31, 1996. The Registrant estimates that
revenues for the year ending March 31, 1997 will include installation at
eight to ten casinos.
Costs and Expenses.
General and Administrative. General and administrative expenses of
$372,325 include all operating expenses not directly related to the conduct
of research and development or marketing activities. It is anticipated that
this amount will increase in fiscal 1997 with the addition of a chief
financial officer and other overhead expenditures necessary to support the
increased activity of the Registrant.
Research and Development. Research and development expenses of
$1,249,588 accounted for 57% of total expenses in 1996. This spending was
anticipated and consists of the costs of bringing CasinoWare and the
Registrant's automated chip counting tray to its current stage of
development. For fiscal 1997, management expects to continue a level of
expenditure on research and development, in the amount of approximately
$1,800,000.
Marketing. Sales and marketing expenses of $551,414 reflects the
expansion and development of the Registrant's marketing activities in
anticipation of approval of CasinoWare by the Gaming Board, as well as
sales in other jurisdictions. To meet these objectives, the Registrant has
established a sales office in Las Vegas and presented its product at the
various gaming trade shows and exhibitions. Expenses for the year ended
March 31, 1996 include the cost of hiring and employing senior sales
personnel to coordinate these market efforts. The Registrant's marketing
budget for fiscal 1997 is estimated to be $600,000.
Liquidity and Capital Resources. Since its inception, the Registrant's
product development costs and capital expenditures have been supported
through the public and private sale of equity securities and payments
received under its agreement with Great Canadian Casino Company. The
Registrant's financial position will be materially affected by the
continued availability of such capital sources. In the past, all these
funding sources have been available at various points in time and in
varying degrees to fund and expand the Registrant's operations. Management
recognizes that from time to time, the financial markets for smaller
software companies may be severely constrained and, as a result, management
has concentrated its recent
26
<PAGE>
efforts on the completion of the software development and the attainment of
commercial sales to fund operations. Despite the volatility in the capital
markets relating to software companies, management believes that companies
which are successful in meeting product development milestones and
establishing a credible product in the marketplace will continue to have
access to capital.
During the period from commencement of operations to February 12,
1996, the date of the initial public offering of the Registrant's shares on
the Vancouver Stock Exchange, the Registrant raised $1,354,727 through the
issue of 3,819,810 shares for cash.
The Registrant received net proceeds of $1,717,489 pursuant to its
initial public offering related to the sale of 2,075,000 common shares. As
part of this offering, the Agent received 375,000 non-transferable
warrants, each warrant entitling the holder to purchase one common share at
$1.25 on or before February 12, 1997 and at $1.44 from February 12, 1997 to
May 12, 1997.
The balance of cash and term deposits of $1,162,466 reflects the net
cash from issue of common shares remaining after funding operating losses
for the year ended March 31, 1996 and after acquiring fixed assets. The
Registrant has spent $196,170 on the acquisition of fixed assets, $31,577
of which was funded through a capital lease. The Registrant expects to
spend a similar amount on fixed assets during fiscal 1997, and in addition
will purchase equipment to be leased to customers at an average amount of
$120,000 (U.S.) per site.
The Registrant believes that its current cash balances will not be
sufficient to meet its capital requirements through fiscal 1997. The
Registrant is preparing to offer additional equity securities to selected
industry and other institutional investors but has no commitment with
respect to any such investment. If the Registrant is unable to raise
additional capital or to qualify its product for sale in the state of
Nevada or is not successful in marketing its products, certain development
activities would need to be curtailed. The Registrant's cash requirements
will depend on several factors including the nature and speed of the
development process, the progress of site testing and the timing and costs
in obtaining regulatory approvals for its products. It is expected that
external funding will be required to support the Registrant's long-term
product development and marketing programs. Factors such as changes in
existing collaborative and joint venture relationships as well as the
establishment of new strategic alliances, product licensing efforts and
other financial relationships could materially impact on the Registrant's
financial position.
The Registrant will decide to issue any additional debt or equity
securities based on market conditions, requirement for funding of its
development programs and operating losses, the price of the Registrant's
common shares and the relative attractiveness of other financing
alternatives. However, given the nature of the Registrant's business, there
is no assurance that adequate funds will be available or that they will be
available on terms acceptable to the Registrant.
27
<PAGE>
The Registrant's products are in the early stages of commercialization
and regulatory approval. Other factors which will affect the Registrant's
ultimate commercial success include the competitive environment, the impact
of technological change, dependence on key personnel and reliance on third
party relationships.
The Registrant's product, once leased by the customer, becomes a fixed
cost to the customer, regardless of any seasonality experienced by the
customer. Accordingly, seasonality is not expected to affect materially the
Registrant's revenues from existing leased sites. However, in terms of
initial product sales, casinos will most likely express an interest in the
product when cash flow is at its highest. Therefore, seasonality may be
more of a factor within the short term of the Registrant's operations when
initial sales are at their highest, and increasingly a lesser factor as the
Registrant's operations mature and lease income becomes more important.
ITEM 3. DESCRIPTION OF PROPERTY
The Registrant's corporate offices are located at #350 - 13775
Commerce Parkway, Richmond, B.C., V6V 2V4 where the Registrant occupies
approximately 2,420 sq. ft. of office space. The oral agreement pursuant to
which the property is occupied by the Registrant calls for a monthly
payment of $5,901. CSCA maintains a research and development facility at
2001 Front Street N.E., Suite A, Salem, Oregon 97303 where CSCA leases
approximately 3540 sq. ft. of office space. CSCA also maintains a marketing
and sales office at 2700 East Sunset Rd., No. 37, Las Vegas, NV 89120 where
it leases approximately 3163 sq. ft. of office space. The leases for the
Salem and Las Vegas properties call for monthly payments of U.S. $4,000 and
U.S. $4,536, respectively and expire October 31, 1997 (with up to three
years of extension options) and September 1, 1999, respectively. The
Registrant believes that its existing facilities are adequate for its
current needs and that additional office space is available on short notice
as required and at rates generally comparable to those paid for its current
facilities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership, as of May 15, 1996 of the Common Stock by (i) each
person known by the Registrant to own beneficially more than 5% of the
Common Stock, (ii) each director of the Registrant, (iii) the Chief
Executive Officer and each other officer named in the Summary Compensation
Table and (iv) all directors and executive officers as a group. Except as
otherwise noted, the Registrant believes the persons listed below have sole
investment and voting power with respect to the Common Stock owned by them.
28
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially Percentage of
Owned(1) Common Stock
------------- -------------
<S> <C> <C>
Roland M. Thomas 925,592 (2) 12.13%
Robert Chamberland 318,506 (3) 4.17%
Dean McClain 56,000 (4) 0.73%
Barry Wong 35,800 (5) 0.47%
John Long 34,600 (6) 0.45%
Ross J. McLeod 454,796 (7) 5.96%
Adrian Thomas 104,250 (8) 1.37%
Patrick Kinsella 164,800 (9) 2.16%
All directors and
executive officers
as a group (8 persons) 2,094,334 27.44%
- --------------
<FN>
(1) Shares which the person or group has the right to acquire within 60
days after May 15, 1995 are deemed to be outstanding in calculating
the percentage ownership of the person or group, but are not deemed to
be outstanding as to any other person or group.
(2) Includes 825,592 shares owned by ERT West, Inc, due to Mr. Thomas'
ownership of 60% of the shares of that company. Also includes 100,000
shares that Mr. Thomas has the right to acquire upon exercise of
options exercisable at any time on or before February 12, 2001.
(3) Includes 283,506 shares owned by ERT West, Inc, due to Mr.
Chamberland's ownership of 20% of the shares of that company. Also
includes 35,000 shares that Mr. Chamberland has the right to acquire
upon exercise of options exercisable between February 12, 1996 and
February 12, 2001.
(4) Includes 50,000 shares that Mr. McClain has the right to acquire upon
exercise of options exercisable at any time on or before April 15,
2001.
(5) Includes 25,000 shares that Mr. Wong has the right to acquire upon
exercise of
29
<PAGE>
options exercisable at any time on or before March 1, 2001.
(6) Includes 2,600 shares owned by SunCom, Inc., due to Mr. Long's
ownership of 100% of the shares of that company. Also includes 32,000
shares that Mr. Long has the right to acquire upon exercise of options
exercisable at any time on or before April 15, 2001.
(7) Includes 263,641 shares owned by Great Casino Company Ltd., due to Mr.
McLeod's ownership of 41.43% of the shares of that company. Also
includes 50,000 shares that Mr. McLeod has the right to acquire upon
exercise of options exercisable at any time on or before February 12,
2001.
(8) Includes 50,000 shares that Mr. Thomas has the right to acquire upon
exercise of options exercisable at any time on or before February 12,
2001.
(9) Includes 50,000 shares that Mr. Kinsella has the right to acquire upon
exercise of options exercisable at any time on or before February 12,
2001.
</FN>
</TABLE>
30
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Information with respect to the directors and executive officers of
the Registrant is set forth below.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Roland M. Thomas 46 President, Chief
Executive Officer
Robert Chamberland 50 Senior Vice-President -
Organization
Dean McClain 51 Executive Vice-President -
Sales and Marketing
Barry Wong 44 Director of Product Development
John Long 48 Director of Marketing
Ross J. McLeod 43 Director
Adrian Thomas 49 Director
Patrick Kinsella 55 Director
</TABLE>
ROLAND M. THOMAS has been the President and Chief Executive Officer of the
Registrant since its inception and has been involved in the management of
product development based software for over 11 years. He has extensive
experience in the United States and Europe and has been responsible for the
development of industrial software systems that are recognized and used by
both the industry and education sectors in North America, Asia and Europe.
Mr. Thomas founded ERT (UK) Ltd. in 1986 and has served as its chairman and
managing director, and the chairman of certain related companies, including
ERT, since that time. Through ERT(UK) Ltd. and its affiliates, Mr. Thomas
has provided consultancy to educational bodies of the Dutch government in
the UK and Holland and has initiated and contributed to a number of UK
technology research programs sponsored by the UK Department of Trade and
Industry and the Ministry of Social Affairs in Holland. Since 1985, Mr.
Thomas has been instrumental in the development in the UK of a portfolio of
industrial simulation and courseware software products. He has also
collaborated with the UK Department of Trade and Industry in designing a
data numerical control system to enable manufacturers to integrate their
computer systems and computer numerical control machine tools. These
products were initially designed for the European market but were later
adapted to American standards for wider marketing. In 1991,
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<PAGE>
Mr. Thomas headed the development team to design a training package for
Autodesk Inc. Mr. Thomas' early career included employment in various
engineering capacities with Lucas Industries and Austin Rover, both of
Birmingham, UK. Mr. Thomas has also been retained by Chichester College
(UK) as a principal lecturer in further and higher education in computer
aided technology and by Brighton Polytechnic, were he was responsible for
computer based training. Mr Thomas has presented several papers on product
development at international conferences and is regularly invited to speak
at a variety of seminars and workshops.
ROBERT CHAMBERLAND has been Senior Vice President of the Registrant since
its inception. From 1992 to 1995, Mr. Chamberland was the President and
Chief Executive Officer of ART, Inc., a machine tool company which remains
in operation and which specializes in the development and marketing of
computer numerical control software and related machinery. From 1990 to
1992 Mr. Chamberland was employed by the Oregon Health Sciences University,
Portland, Oregon, as a Research Assistant, where his responsibilities
included the development, organization and implementation of US government
grant programs in the four state region of Alaska, Washington, Idaho and
Oregon. From 1984 to 1987 Mr. Chamberland was employed by the West Virginia
University, Morgantown, West Virginia as a Research Assistant, where his
responsibilities also included the development, organization and
implementation of US government grant programs in the State of West
Virginia. These were "start-up" programs which were managed by the
university. Mr. Chamberland holds a Bachelor of Science Degree from the
University of Massachusetts. He has pursued additional university studies
in a variety of management areas since his graduation in 1972.
DEAN MCCLAIN joined the Registrant effective June 1, 1996 after serving as
Executive Vice President of the Las Vegas based Bud Jones Company, one of
the world's leading manufacturers and distributors of gaming chips, tokens,
gaming tables, roulette wheels and casino supplies. Mr. McClain's career in
gaming began in 1986 when he joined International Game Technology ("IGT")
as General Manager of Domestic Sales. Between 1987 and 1992 his efforts at
IGT shifted to international sales and development including an assignment
in Sydney, Australia as Managing Director where he managed IGT-Australia's
Pacific Rim manufacturing, operations and distribution facility. Following
his return to the U.S., McClain was promoted to Senior Vice President of
Public Gaming and in 1993 to Senior Vice President of IGT's then new
International Division. Prior to his involvement in gaming, Mr. McClain was
a principal in several privately owned companies including a family owned
insurance business in Tulsa, Oklahoma. Mr. McClain holds both a Masters
degree in Business Administration from Central State University in Edmond,
Oklahoma and a Bachelors degree from Oklahoma State University in
Stillwater, Oklahoma.
BARRY WONG joined the Registrant as Director of Product Development &
Technical Support in early 1996. Mr. Wong has eighteen years of experience
developing software products and business systems solutions. From 1978 to
1982, he served as Senior Engineer for The Boeing Co. developing
state-of-the-art integrated CAD/CAM networks to support the design and
manufacturing of the 757 and 767 commercial jets. From 1982 to 1990, he was
the director of MIS for Pay 'N Pak Stores,
32
<PAGE>
Inc. and streamlined many business operations through the use of automation
and computer technology. Mr. Wong's efforts were instrumental in Pay 'N
Pak's sales growth from $175 million to $500 million during this time
period. From 1990 to 1992, Mr. Wong served as Vice President of MIS for
Simpson & Fisher Companies, Inc., a national retail startup venture, where
he directed all MIS and distribution operations. From 1992 to January 1996,
Mr. Wong served as a Product Development Manager for Automatic Data
Processing, Inc., an international turnkey systems provider for several
vertical markets with over $2 billion in annual sales, where he directed
the development of turnkey products for the automotive dealership industry;
these products were installed in over 2,000 automotive dealerships in North
America. He was instrumental in obtaining product certification from major
automotive manufacturers such as General Motors, Nissan, Toyota, Chrysler,
Jaguar, etc. Mr. Wong holds a Masters degree and a Bachelors degree in
computer science and a Bachelors degree in Business Administration from
Washington State University.
JOHN LONG joined the Registrant in March of 1996 as the Director of
Marketing. Prior to joining the Registrant, Mr. Long owned Sunset
Communications, a San Diego-based marketing firm that performed contract
marketing and professional consulting services for IGT, MIKOHN GAMING, the
Bud Jones Company, and other Nevada gaming concerns since 1992. Between
1978 and 1992, Mr. Long operated TeleVu, a regionally-based advertising
network he founded in 1979 which served nearly 120 major hotels in
California. Between 1980 and 1988, Mr. Long was also co-owner and Executive
Producer of A&G Productions, a nationally known commercial film and video
production company with more than forty Emmy's, Aces, Golden Anvil and
other prestigious awards to his company's credit. Following his graduation
from San Diego State University in 1969, Mr. Long also served in numerous
programming and management capacities with Cox Communications.
PATRICK KINSELLA joined the Registrant at its inception as a director. Mr.
Kinsella works for the Registrant on a part-time basis. During the past
five years, Mr. Kinsella has been the Chairman and Chief Executive Officer
of Progressive Strategies Limited, which specializes in public affairs
consulting.
ROSS MCLEOD has been a director of the Registrant since its inception. From
1994 to the present, Mr. McLeod has been the President and general manager
of Great Canadian Casino Company, Ltd. ("GCCC"), a gaming operator with
seven casinos in British Columbia. From 1990 to 1994, Mr. McLeod was the
Vice President and general manager of GCCC, which he also co-founded.
ADRIAN THOMAS has been a director of the Registrant since its inception. In
1995, Mr. Thomas became Executive Vice President of Great Canadian Casino
Company, Ltd. ("GCCC"), a gaming operator with seven casinos in British
Columbia. From 1992 to 1995, Mr. Thomas was the Vice President of
Operations for GCCC, and from 1990 to 1992, he was a consultant to GCCC.
Adrian Thomas is the brother of Roland Thomas.
Directors of the Registrant are not compensated for services in that
capacity. All the members of the Registrant's management team have entered
into written employment and nondisclosure or noncompetition agreements with
the Registrant or its subsidiary.
33
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth compensation
information for the Chief Executive Officer of the Registrant in fiscal
1996. No executive officer of the Registrant was paid compensation in
excess of $100,000 for fiscal 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
-------------------------------------
Fiscal All Other
Year Salary Bonus Compensation(1)
---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Roland M. Thomas 1995 US $35,400 0 0
- --------------
<FN>
(1) The aggregate amount of perquisites and other personal benefits was
less than either $50,000 or 10% of the total of the annual salary and
bonus reported for the applicable Named Officer.
</FN>
</TABLE>
Stock Options Granted in Fiscal 1996. The following table sets forth
certain information concerning individual stock options granted to
executive officers during the last fiscal year, ending March 31, 1996.
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<CAPTION>
Percentage of
Total Options
Number of Granted to
Securities Underlying Employees in Exercise Expiration
Options Granted Fiscal Year Price Date
--------------- ----------- ----- ----
<S> <C> <C> <C> <C>
Roland M. Thomas .................. 100,000 16.26% $1.25 2/12/2001
Robert Chamberland................. 35,000 5.69% $1.25 2/12/2001
</TABLE>
Aggregated Option Exercises. The following table sets forth certain
information concerning the number of shares covered by both exercisable and
unexercisable stock options as of March 31, 1996. Also reported are values
of "in-the-money" options that represent the positive spread between the
respective exercise prices of outstanding stock options and the fair market
value of the Registrant's Common Stock as of March 31, 1996.
34
<PAGE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End at Fiscal Year-End
-------------------------------- ----------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Roland M. Thomas ................... 100,000 0 $99,000 $0
Robert Chamberland.................. 35,000 0 $34,650 $0
</TABLE>
Employment Contracts. Each officer of the Registrant is employed
pursuant to an employment agreement terminable by either the employee or
the Registrant on ninety days notice.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1996, expenses of $70,812 and US $48,000 were paid to GCCC
and ERT, respectively for rental of office space.
In fiscal 1996, the Registrant earned $157,654 from GCCC under its
contract to install CasinoWare in one of GCCC's casinos.
Included in expenses is $7,500 paid to Tom Bell, who is related to
Ross McLeod, a director of the Registrant, for consulting services.
Included in expenses is $123,488 paid for wages and benefits to Roland
Thomas, a director of the Registrant; Robert Chamberland, an officer of the
Registrant; and Amanda Wesley-Worth, who is related to Roland Thomas.
Pursuant to an Asset Purchase Agreement dated effective April 11, 1995
between GCCC, ERT and the Registrant, the Registrant acquired all right,
title and interest of GCCC and ERT in and to the CasinoWare software system
in consideration for the issuance of 682,346 shares to GCCC and 380,044
shares to ERT at a deemed price of $0.25 per share. The transaction was not
at arm's length due to the fact that GCCC and the Registrant have a
director in common (Ross McLeod), a director of the Registrant (Adrian
Thomas) is a senior officer of GCCC, ERT and the Registrant have a director
in common (Roland Thomas) and a senior officer of the Registrant (Robert
Chamberland) is a director of ERT. The value of the consideration paid to
the vendors was determined on the basis of the out-of-pocket costs incurred
by each of the vendors in respect of the CasinoWare system as at the
effective date of the Asset Purchase Agreement, as determined in accordance
with the provisions of British Columbia Securities Commission Local Policy
Statement 3-07. The out-of-pocket costs incurred by GCCC were $170,586.50
and by ERT were $95,011. (See also "Business of the Registrant" and
"Material Contracts" herein).
35
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
Authorized Securities
The authorized capital stock of the Registrant consists of 50,000,000
Common Shares. As of May 15, 1996, 6,983,450 Common Shares were outstanding
and an additional 1,305,750 Common Shares were reserved for issuance upon
exercise of certain outstanding options and warrants.
COMMON SHARES. Holders of Common Shares are entitled to one vote per
share on all matters submitted to a vote of the shareholders of the
Registrant. Except as required by law, holders of Common Shares will not
vote separately as a class, but will vote together with the holders of
other classes of capital stock of the Registrant. There is no right to
cumulate votes for the election of directors. Two persons holding or
representing by proxy not less than one-tenth of the Registrant's
outstanding Common Shares present in person or by proxy, which are entitled
to vote at the meeting, constitute a quorum at any meeting of the
shareholders, unless the Registrant has only one member, in which case the
quorum shall be that member. The vote of not less than three quarters of
the votes cast at a general meeting is required to effect certain
fundamental changes in the Registrant, such as liquidation, merger or
amendment of the Registrant's Memorandum.
Holders of Common Shares are entitled to receive dividends if, as, and
when declared by the Board of Directors out of funds legally available
therefor, after payment of any preferential dividends required to be paid
with respect to any other class of stock. Upon liquidation of the
Registrant, holders of Common Shares are entitled to share ratably in all
assets of the Registrant remaining after payment of liabilities, subject to
the liquidation preference rights of outstanding stock, if any, having such
preference rights. The outstanding Common Shares are fully paid and
nonassessable. Holders of Common Shares have no preemptive rights to
acquire securities of the Registrant.
ESCROWED COMMON SHARES.
In accordance with a policy of the British Columbia Securities
Commission (the "Policy"), 1,687,610 Common shares issued to certain
principals of the Registrant ("Performance Shares") are held in escrow
pursuant to a Performance Shares Escrow Agreement (the "Escrow Agreement")
dated as of April 11, 1995 between the Registrant, Montreal Trust Company
of Canada, as escrow agent, GCCC and ERT, the latter two being the affected
principals. Pursuant to the terms of the Escrow Agreement, the Performance
Shares may be released from escrow, on a pro-rata basis, based on the
cumulative cash flow of the Registrant, as evidenced by the Registrant's
annual audited financial statements. "Cash Flow" is defined to mean net
income or loss before tax, adjusted for certain addbacks. Performance
Shares may be released only once during the Registrant's fiscal year. One
Performance Share may be released for each $0.32 of cumulative cash flow
generated by the Registrant from its operations. The Performance Shares may
only be transferred to other principals of the Registrant and only in
accordance with the Policy, and with the consent of the Superintendent of
the Vancouver Stock Exchange. Holders of Performance Shares retain the
right to vote the
36
<PAGE>
Performance Shares, except on a resolution respecting their cancellation,
but have waived any rights attached to those shares to receive dividends or
to participate in the assets and property of the Registrant on a winding up
or dissolution. While the Performance Shares are in escrow, if a holder of
Performance Shares becomes bankrupt or ceases to be a principal, then such
person's Performance Shares are transferred to a person or persons directed
by the Registrant for consideration to be agreed between the proposed
transferee and the trustee in bankruptcy or the principal as the case may
be. If such agreement cannot be reached within 30 business days, such
person's Performance Shares will be canceled.
Any Performance Shares not released from escrow within ten years from
the later of the date of issue and the date of receipt of the Registrant's
final prospectus for its initial public offering must be surrendered for
cancellation. The Performance Shares must also be surrendered for
cancellation if the Registrant's shares have been subject to a cease trade
order for a period of two consecutive years or if required by the Executive
Director of the Vancouver Stock Exchange as a condition of its consent to a
major reorganization of the Registrant.
OPTIONS AND WARRANTS.
Stock Option Plan
The Registrant expects to propose to its shareholders at its Annual
General Meeting, to be held July 12, 1996 the adoption of its 1996 Stock
Option Plan covering up to 600,000 shares of Common Stock. Under the Plan,
if adopted, incentive stock options, as provided in Section 422A of the
Internal Revenue Code of 1986, may be granted to key employees and other
options, stock or bonus rights may be granted to key employees, independent
contractors and consultants. No options or other rights have been granted
under the Plan and it is anticipated that the Plan will be used principally
to attract and retain new employees and to reward key independent
contractors or consultants.
The Plan will be administered by a committee of the Board of
Directors, consisting entirely of non-employee directors, which has the
authority, subject to the terms of the Plan, to determine the persons to
whom options or rights may be granted, the exercise price and number of
shares subject to each option or right, whether the options granted to
employees are to be incentive stock options, the time or times at which all
or a portion of each option or right may be exercised and certain other
provisions of each option or right. The Plan will also provide for the
issuance of options to non-employee directors on a non-discretionary basis.
The purchase price of Common Stock upon exercise of incentive stock
options must not be less than the fair market value of the Common Stock at
the date of the grant (110% of fair market value in the case of incentive
stock options issued to holders of more than 10% of the combined voting
power for all classes of the Registrant's equity securities.) The
Registrant will not issue any nonqualified stock options unless the
exercise price is, in the opinion of the Board of Directors or the
committee to which management of the Plan has been delegated, at least 85%
of the fair market
37
<PAGE>
value of the Common Stock on the date of the grant. The maximum term of
incentive or nonincentive stock options is ten years; incentive stock
options must be exercised by the optionee during the period of the
optionee's employment or during an extension period upon certain events of
termination of employment, death or retirement due to age or disability.
The aggregate fair market value, on the date of the grant, of the stock for
which incentive stock options are exercisable for the first time by an
employee during any calendar year may not exceed $100,000.
Other Outstanding Options and Warrants
The Registrant has outstanding directors and employees incentive stock
options to purchase up to an aggregate 649,500 common shares without par
value in the capital of the Registrant. Of this amount, 562,500 are
exercisable at a price of $1.25 per share on or before February 12, 2001,
100,000 are exercisable at a price of $2.27 per share on or before March 1,
2001, and 82,000 are exercisable at $2.28 per share on or before April 15,
2001. These options were granted to directors and employees of the
Registrant to provide incentive for their continued efforts on behalf of
the Registrant.
The Registrant has outstanding private placement warrants to purchase
up to an aggregate of 300,000 common shares without par value in the
capital of the Registrant. These warrants were issued on November 6, 1995
to certain parties who subscribed for seed shares of Registrant at $0.85
per share. Each warrant entitles the holder to purchase one common share
without par value of the Registrant at $1.25 per share at any time on or
before November 6, 1996.
The Registrant has outstanding agent's warrants to purchase up to an
aggregate of 356,250 common shares without par value in the capital of the
Registrant. These warrants were issued to brokers who participated in the
Registrant's public offering of securities in British Columbia. Each
warrant entitles the holder to subscribe for and purchase one common share
without par value in the capital of the Registrant at any time on or before
the close of business on May 12, 1997, at a price of $1.25 per share if
exercised on or before February 12, 1997, and at a price of $1.44 per share
if exercised after February 12, 1997 but on or before May 12, 1997.
Subject to the approval of the applicable British Columbia regulatory
authorities, the Registrant has granted to its primary United States law
firm a five-year warrant to purchase up to 50,000 Common Shares at an
exercise price of $2.25 per share. The warrant would be granted as a part
of such firm's compensation for services to be rendered in connection with
this registration statement and certain related matters.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is Montreal
Trust Company of Canada.
38
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Since February 12, 1996, the Registrant's Common Shares have been
traded on the Vancouver Stock Exchange under the symbol CFA. The high and
low closing bid prices for the Common Shares reported by the Vancouver
Stock Exchange for the period from February 12, 1996 to March 31, 1996 were
$2.50 and $1.74, respectively. The high and low closing bid prices for the
Common Shares reported by the Vancouver Stock Exchange for the period from
April 1, 1996 to May 10, 1996 were $2.55 and $2.05, respectively.
Historical trades on the Vancouver Stock Exchange have been affected
by the existence of voluntary pooling agreements pursuant to which stock
held by certain principals of the Registrant and others has been pooled in
a fund that has been used to assist in maintaining a stable market in the
Registrant's securities. Because, upon the effectiveness of this
Registration Statement, the Registrant and its management and principal
shareholders will become subject to regulatory requirements under the
Securities Exchange Act of 1934, as amended, that will make such market
activity practically unfeasible, it is expected that the pooling agreements
will be terminated effective on the effectiveness of this Registration
Statement. As a result, the liquidity of the market for the Common Shares
may decrease and the volatility of the price for the Common Shares may
increase in comparison to historical results.
ITEM 2. LEGAL PROCEEDINGS.
The Registrant is not a party to any material legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since its incorporation on April 10, 1995, the Registrant has
undertaken the following sales of unregistered securities:
On April 10, 1995, the Registrant issued one (1) common share
without par value to its initial subscriber who thereafter
immediately transferred this one (1) share to Great Canadian
Casino, Ltd.;
39
<PAGE>
On April 11, 1995, the Registrant issued 697,109 common shares
without par value to ERT West, Inc. at a subscription price of
$0.25 per share;
On April 11, 1995, the Registrant issued 380,044 common shares
without par value to ERT West, Inc. at a subscription price of
$0.01 per share;
On April 11, 1995, the Registrant issued 240,500 common shares
without par value to Great Canadian Casino, Ltd. at a
subscription price of $0.01 per share;
On April 11, 1995, the Registrant issued 682,346 common shares
without par value to Great Canadian Casino, Ltd. at a
subscription price of $0.25 per share;
Over the period June 8, 1995 to January 9, 1996, the Registrant
issued 2,132,200 common shares without par value to numerous seed
share subscribers at subscription prices as follows:
a) 1,165,000 shares at $0.50 per share;
b) 667,000 shares at $0.75 per share;
c) 300,000 shares at $0.85 per share;
On December 21, 1995, the Registrant issued 403,932 common shares
without par value to ERT West, Inc. at a subscription price of
$0.01 per share;
On December 21, 1995, the Registrant issued 346,068 common shares
without par value to Great Canadian Casino, Ltd. at a
subscription price of $0.01 per share;
Commencing January 30, 1996, the Registrant undertook a public
offering of its securities in the Province of British Columbia
whereby the Registrant issued 1,725,000 common shares, without
par value, to various subscribers at a subscription price of
$1.25 per share. In addition to the issuance of 1,725,000 common
shares, the Registrant also issued 350,000 common shares without
par value as a corporate finance fee to Canaccord Capital
Corporation who acted as agent for the public offering;
Since completion of its public offering in British Columbia, the
Registrant has issued 243,750 common shares without par value as
a result of parties exercising stock options or warrants.
Subject to the approval of the applicable British Columbia regulatory
authorities, the Registrant has granted to its primary United States law
firm a five-year warrant to purchase up to 50,000 Common Shares at an
exercise price of $2.25 per share. The warrant was granted as a part of
such firm's compensation for services to be rendered in connection with
this registration statement and certain related matters.
40
<PAGE>
The Registrant has entered into an engagement agreement with United
States branch of a major international investment bank pursuant to which,
if the Registrant engages in certain financing transactions, such bank is
entitled to be issued 500,000 Common Shares as a part of its compensation
relating to such transactions.
With respect to such of the above transactions as were subject to
United States securities laws, the Registrant relied on an exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended,
as not involving a public offering of securities.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Registrant contain the following
indemnification provisions for directors and officers of the Registrant:
The Registrant shall indemnify any director, officer,
employee, or agent of the Registrant who was or is a party
or is threatened to be made a party to any threatened,
pending, or completed action or proceeding and whether
civil, criminal, or administrative, by reason of the fact
that he is or was a director, officer, employee, or agent of
the Registrant or any act or thing occurring at a time when
he is or was serving at the request of the Registrant as a
director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against all costs, charges, and expenses,
including legal fees and any amount paid to settle the
action or proceeding or satisfy a judgment, if he acted
honestly and in good faith with a view to the best interests
of the corporation or other legal entity or enterprise as
aforesaid of which he is or was a director, officer,
employee, or agent, as the case may be, and exercise the
care, diligence, and skill of a reasonably prudent person,
and with respect to any criminal or administrative action or
proceeding, he had reasonable ground for believing that his
conduct was lawful; provided that no indemnification of a
director or former director of the Registrant, or director
or former director of a corporation in which the Registrant
is or was a shareholder, shall be made except to the extent
approved by the Court pursuant to the Company Act of British
Columbia or any other statute. The determination of any
action, suit, or proceeding by judgment, order, settlement,
conviction, or otherwise shall not, of itself, create a
presumption that the person did not act honestly and in good
faith and in the best interests of the Registrant and did
not exercise the care, diligence, and skill of a reasonably
prudent person and, with respect to any criminal action or
proceeding, did not have reasonable grounds to believe that
his conduct was lawful.
The Registrant shall indemnify any person in respect of any
loss, damage, costs, or expenses whatsoever incurred by him
while acting as an officer, employee, or agent for the
Registrant, unless such loss, damage, costs, or expenses
shall arise out of failure to comply with instructions,
wilful act, or default or fraud by such person, in any of
which
41
<PAGE>
events the Registrant shall only indemnify such person if
the directors, in the absolute discretion, so decide, or the
Registrant by ordinary resolution shall so direct.
The indemnification provided by the Article shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any other Article or
any valid and lawful agreement, vote of members or
disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent
and shall inure to the benefit or heirs, executors, and
administrators of such person. The indemnification provided
by this Article shall not be exclusive of any powers,
rights, agreements, or undertakings which may be legally
permissible or authorized by or under any applicable law.
Notwithstanding any other provisions set forth in the
Article, the indemnification authorized by this Article
shall be applicable only to the extent that any such
indemnification shall not duplicate indemnity or
reimbursement which that person has received or shall
receive otherwise than under this Part.
The directors are authorized from time to time to cause the
Registrant to give indemnities to any director, officer,
employee, or agent or other person who has undertaken or is
about to undertake any liability on behalf of the Registrant
or any corporation controlled by it.
Subject to the Company Act of British Columbia, no director
or officer or employee for the time being of the Registrant
shall be liable for the acts, receipts, neglects, or
defaults of any other director or officer or employee, or
for joining in any receipt or act for conformity, or for any
loss, damage, or expense happening to the Registrant through
the insufficiency or deficiency of title to any property
acquired by order of the Board for the Registrant, or for
the insufficiency or deficiency of any security in or upon
which any of the moneys of or belonging to the Registrant
shall be invested or for any loss or damages arising from
the bankruptcy, insolvency, or tortious act of any person,
firm, or corporation with whom or which any moneys,
securities, or effects shall be lodged or deposited or for
any loss occasioned by any error of judgment or oversight on
his part or for any other loss, damage, or misfortune
whatever which may happen in the execution of the duties of
his respective office or trust or in relation thereto,
unless the same shall happen by or through his own wilful
act or default, negligence, breach of trust, or breach of
duty.
Directors may rely upon the accuracy of any statement of
fact represented by an officer of the Registrant to be
correct or upon statements in a written report of the
auditor of the Registrant and shall not be responsible or
held liable for any loss or damage resulting from the paying
of any dividends or otherwise acting in good faith upon any
such statement.
42
<PAGE>
The directors may cause the Registrant to purchase and
maintain insurance for the benefit of any person who is or
was a director, officer, employee, or agent of the
Registrant or is or was serving at the request of the
Registrant as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or
other enterprise against any liability incurred by him as a
director, officer, employee, or agent.
43
<PAGE>
FINANCIAL INFORMATION
CSCC CASINO SOFTWARE CORPORATION
AUDITORS' REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
----
Independent Auditors Report 44
Consolidated Balance Sheet as of March 31, 1996 45
Consolidated Statement of Loss and Deficit for the 46
year ended March 31, 1996
Consolidated Statement of Changes in Financial 47
Position for the year ended March 31, 1996
Notes to Consolidated Financial Statement 48
FINANCIAL STATEMENT SCHEDULES AND SUPPLEMENTARY DATA
Financial statement schedules and supplementary data have been omitted
since they are either not required, are not applicable, or the required
information is shown in the consolidated financial statements and related
notes.
44
<PAGE>
AUDITORS' REPORT
To the Directors of
CSCC Casino Software Corporation
We have audited the consolidated balance sheet of CSCC Casino Software
Corporation as at March 31, 1996 and the consolidated statements of loss
and deficit and changes in financial position for the year then ended.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards in Canada. Those standards require that we plan and perform an
audit to obtain reasonable assurance as to 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.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at March
31, 1996 and the results of its operations and the changes in its financial
position for the year then ended in accordance with generally accepted
accounting principles in Canada.
Chartered Accountants
Vancouver, British Columbia
April 19, 1996
45
<PAGE>
<TABLE>
<CAPTION>
CSCC CASINO SOFTWARE CORPORATION
CONSOLIDATED BALANCE SHEET
as at March 31, 1996
<S> <C>
CURRENT ASSETS
Cash and term deposits $ 1,162,466
Prepaid expenses and deposits 46,566
- --------------------------------------------------------------------------------------------
1,209,032
Fixed assets (Note 3) 155,510
Acquired software (Note 4) 265,597
- --------------------------------------------------------------------------------------------
$ 1,630,139
============================================================================================
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 208,484
Current portion of obligations under capital leases (Note 5) 10,400
- --------------------------------------------------------------------------------------------
218,884
Obligations under capital leases (Note 5) 21,177
- --------------------------------------------------------------------------------------------
240,061
- --------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY Share capital (Note 6)
Authorized
50,000,000 common shares without par value
Issued
6,975,950 common shares 3,361,251
Deficit (1,971,173)
- --------------------------------------------------------------------------------------------
1,390,078
- --------------------------------------------------------------------------------------------
$ 1,630,139
============================================================================================
</TABLE>
APPROVED BY THE BOARD:
....................................... Director
....................................... Director
46
<PAGE>
<TABLE>
<CAPTION>
CSCC CASINO SOFTWARE CORPORATION
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
year ended March 31, 1996
<S> <C>
Revenue $ 202,154
- --------------------------------------------------------------------------------------------
Expenses
Audit, accounting and legal 8,000
Automobile 8,058
Bank charges and interest 9,401
Communications 16,062
Depreciation 17,097
Consulting 58,481
Investor relations 3,000
Recruitment fees 40,076
Travel and entertainment 67,978
Wages and employee benefits 64,565
Offices 40,475
Rent 39,132
- --------------------------------------------------------------------------------------------
372,325
Research and development 1,249,588
Sales and marketing 551,414
- --------------------------------------------------------------------------------------------
2,173,327
- --------------------------------------------------------------------------------------------
NET LOSS FOR THE YEAR AND DEFICIT AT END OF YEAR $(1,971,173)
============================================================================================
LOSS PER SHARE ($0.49)
============================================================================================
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
CSCC CASINO SOFTWARE CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
year ended March 31, 1996
NET INFLOW OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
<S> <C>
OPERATING
Net loss for the period $(1,971,173)
Item not affecting cash
Depreciation 40,660
- --------------------------------------------------------------------------------------------
(1,930,513)
Non-cash operating working capital 161,918
- --------------------------------------------------------------------------------------------
(1,768,595)
- --------------------------------------------------------------------------------------------
FINANCING
Issue of common shares 3,361,251
Obligations under capital lease, net 31,577
- --------------------------------------------------------------------------------------------
3,392,828
- --------------------------------------------------------------------------------------------
INVESTING
Acquisition of Software (265,597)
Purchase of fixed assets (196,170)
- --------------------------------------------------------------------------------------------
(461,767)
- --------------------------------------------------------------------------------------------
NET CASH FLOW AND CASH AT END OF PERIOD $ 1,162,466
- --------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
CSCC CASINO SOFTWARE CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
year ended March 31, 1996
1. DESCRIPTION OF BUSINESS
The Company was incorporated on March 1, 1995 under the laws of the
Province of British Columbia under the name of Entertainment Research
Technologies (B.C.) Inc. and changed its name to CSCC Casino Software
Corporation (the "Company") effective April 10, 1995. The Company
commenced operations effective April 11, 1996.
The Company is principally engaged in the business of developing
software exclusively for use in the gaming industry.
2. ACCOUNTING POLICIES
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada, which differ in
some respects from generally accepted accounting principles in the
United States (Note 9), and reflect the following significant
accounting policies:
a) Consolidation
The financial statements include the accounts of the Company and
its wholly-owned U.S. subsidiary, The Casino Software Corporation
of America. All Intercompany transactions and balances have been
eliminated.
b) Fixed assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation is provided on a declining balance basis at the
following annual rates:
Furniture, fixtures and equipment 20%
Equipment under capital lease Term of lease
c) Acquired software
Acquisition costs of software are capitalized in the accounts and
amortized on a straight line basis over the estimated sales life
of the products commencing with commercial sales. Acquired
software is valued at the lower of amortized cost and net
recoverable amount.
49
<PAGE>
d) Research and development costs
Research costs are expensed as incurred.
Software development costs which meet the criteria for deferral
and are expected to provide future benefits with reasonable
certainty are deferred and amortized over the estimated sales
life of the products. Other software development costs are
expensed as incurred.
e) Foreign exchanges translation
Exchange gains or losses arising on translation are included in
income for the year, except for those gains and losses arising
from the translation of long-term monetary assets and liabilities
which are deferred and amortized over the life of the respective
asset or liability. The Company's foreign operation is an
integrated subsidiary and its financial statements are translated
using the temporal method.
f) Earnings per share
Earnings per share has been calculated on the weighted average
number of common shares outstanding during the year. Fully
diluted earnings per share calculation have not been presented as
they would not differ from basic earnings per share.
3. FIXED ASSETS
<TABLE>
<CAPTION>
Accumulated Net book
Cost depreciation value
------------------------------------------------
<S> <C> <C> <C>
Equipment under capital lease $ 37,582 $ 8,942 $ 28,640
Furniture, fixtures and equipment 158,588 31,718 126,870
------------------------------------------------
$ 196,170 $ 40,660 $ 155,510
================================================
</TABLE>
50
<PAGE>
4. ACQUIRED SOFTWARE
Effective April 11, 1995, the Company entered into an agreement with
Great Canadian Casino Company Ltd. and ERT West, Inc., both of which
are related to the Company by way of directors in common, under which
it purchased all rights, title, and interest in and to the
CasinoWareTM software system. The consideration paid for this asset,
representing the costs incurred by the vendors in the development of
this asset, consisted of 1,062,390 common shares at a deemed value of
$265,597 (Note 6).
No amortization has been recorded during the year ended March 31,
1996, as commercial sales had not yet been achieved.
5. OBLIGATIONS UNDER CAPITAL LEASES
Minimum lease payments under capital leases:
1996 $ 15,500
1997 15,500
1998 7,841
----------
Total minimum lease payments 38,841
Less: interest component at 21.81% per annum 7,264
----------
Present value of minimum lease payments 31,577
Due within one year 10,400
----------
$ 21,177
==========
Included in general and administrative expense is $4,480 of
interest expense related to the capital leases.
51
<PAGE>
6. SHARE CAPITAL
During the year ended March 31, 1996, the Company issued common shares
as follows:
<TABLE>
<CAPTION>
Number of
common
shares Amount
----------- -----------
<S> <C> <C>
Issued for cash 3,819,810 $ 1,354,727
Issued to acquire software (Note 4) 1,062,390 265,597
Issued for cash pursuant to a public offering,
net of issue costs of $438,760 2,075,000 1,717,489
Issued for cash on the exercise of warrants 18,750 23,438
----------- -----------
BALANCE AT MARCH 31, 1996 6,975,950 $ 3,361,251
================================
</TABLE>
On February 12, 1996 the Company, issued 2,075,000 shares (comprised
of 1,500,000 common shares under the initial public offering, 225,000
shares under the exercise of a Greenshoe Option and 350,000 shares as
a corporate finance fee) for net proceeds of $1,717,489 pursuant to an
initial public offering. As part of this offering, the agent received
375,000 non-transferable warrants. Each warrant entitles the holder to
purchase one share at $1.25 on or before February 12, 1997 and at
$1.44 from February 12, 1994 to May 12, 1997. At March 31, 1996
356,250 of these warrants remained outstanding.
As at March 31, 1996, 300,000 non-transferrable private placement
share purchase warrants were outstanding. These warrants entitle the
holder to purchase one additional common share of the Company at $1.25
per share until November 6, 1996.
At March 31, 1996, options to purchase 697,000 shares were outstanding
as follows:
Number of
shares Exercise Price Expiry date
------ -------------- -----------
615,000 $1.25 February 12, 2001
100,000 $2.27 March 1, 2001
82,000 $2.28 April 15, 2001
52
<PAGE>
7. COMMITMENTS
The Company has an operating lease commitment payable in 1996 with a
company related by a director in common in the amount of $47,600.
53
<PAGE>
8. RELATED PARTY TRANSACTIONS
a) Included in expenses is $90,872 paid to companies related by way
of directors in common for rental of office space.
b) Included in revenue is $157,654 earned from a company related by
way of director in common.
c) Included in expenses is $7,500 paid to a person related to a
director.
d) Included in expenses is $123,488 paid to a director, a director
of a subsidiary, and a person related to a director of the
Company for wages and benefits.
e) During the year, the Company acquired software from companies
related by directors in common by issuing 1,062,390 common shares
at a deemed value of $265,597 (Note 4).
9. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in Canada
("Canadian GAAP") which, in the case of these financial statement,
conform in all material respects with those in the United States
("U.S. GAAP") except as follows:
NET LOSS
Net loss under Canadian GAAP (1,971,173)
Acquired software (265,597)
------------
Net loss under U.S. GAAP $ (2,236,770)
============
Loss per share under U.S. GAAP ($0.97)
============
DEFICIT
Deficit under Canadian GAAP $ (1,971,173)
Acquired software (265,597)
------------
Deficit under U.S. GAAP $ (2,236,770)
============
54
<PAGE>
9. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(Continued)
a) Acquired software and product development costs
Under U.S. GAAP, acquired software and costs incurred in the
development of products to be sold, leased or otherwise marketed
are to be expensed as incurred until the project is established
as technologically feasible. Under Canadian GAAP, acquired
software costs have been capitalized. To reconcile the difference
in net loss from Canadian to U.S. GAAP, acquired software is
reflected as development expenses in the period incurred.
b) Statement of cash flows
Under U.S. GAAP, presentation of a statement of cash flows is
required which reflects only cash transactions affecting
financing and investing activities. Under Canadian GAAP, non-cash
operating financing and investing activities are required in
addition to cash flows in the statement of changes in financial
position. The following transactions would be excluded from the
statements of cash flows under U.S. GAAP.
Year ended
March 31, 1996
--------------
Increase (decrease)
Investing activities
Acquisition of software $ (265,597)
Financing activities
Share capital $ 265,597
c) Loss per share
Under U.S. GAAP, weighted average shares outstanding for the
purpose of determining primary loss per share are calculated
using the treasury stock method. Under Canadian GAAP, weighted
average shares outstanding for the purpose of determining basic
earnings (loss) per share are calculated using a simple weighted
average. For purposes of determining the weighted average shares
outstanding for U.S. GAAP, 1,687,610 shares held in escrow are
not considered outstanding.
55
<PAGE>
d) Income taxes
For the purpose of reporting under U.S. GAAP, Financial
Accounting Standards Board Statement No. 9 "Accounting for Income
Taxes" ("SFAS 109") became effective for fiscal years beginning
after December 15, 1992. This standard requires companies to
adopt an asset and liability approach in accounting for income
taxes. There was no cumulative effect, or effect on current
results, as a consequence of adopting SFAS 109.
e) Cash and term deposits
Included in cash and term deposits is $258,708 in term deposits
which would under U.S. GAAP be separately identified as term
deposits on the balance sheet.
10. INCOME TAXES
The Company has losses of approximately $1,950,000 available to reduce
future income taxes. These losses expire in 2003. No recognition has
been given in these financial statements to the potential tax benefits
associated with the above losses.
11. SEGMENTED INFORMATION
The Company operates in one industry and two geographic locations.
Sales for the year
Canada $ 202,154
United States -
-----------
$ 202,154
===========
Net loss for the year
Canada $ 546,066
United States 1,425,107
-----------
$ 1,971,173
===========
Identifiable assets at end of the year
Canada $ 1,000,239
United States 629,900
-----------
$ 1,630,139
===========
56
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--- -----------
2.1 Certificate of Incorporation, Memorandum and amendments thereto
of CSCC Casino Software Corporation.
2.2 Articles of CSCC Casino Software Corporation.
3 Specimen Stock Certificate of CSCC Casino Software Corporation.
6.1 Lease Agreement, dated June 1, 1995, between ERT West, Inc.
and Casino Software Corporation of America.
6.2 Lease Agreement, dated August 21, 1995, between Park 2000
Associates and Casino Software Corporation of America and
Addendum for Lease Extension thereto.
6.3 Lease Agreement, dated April 16, 1996, between Park 2000
Associates and Casino Software Corporation of America.
6.4 CasinoWare Support and Maintenance Agreement, dated July 27,
1995, between ComputerHelp Resources, Inc. and The Casino
Software Corporation of America.
14 Form F-X, Appointment of Agent for Service of Process, dated
May 24, 1996.
ITEM 2. DESCRIPTION OF EXHIBITS
EXHIBIT
NO. DESCRIPTION
--- -----------
2.1 Certificate of Incorporation, Memorandum and amendments
thereto of CSCC Casino Software Corporation.
57
<PAGE>
EXHIBIT
NO. DESCRIPTION
--- -----------
2.2 Articles of CSCC Casino Software Corporation.
3 Specimen Stock Certificate of CSCC Casino Software Corporation.
6.1 Lease Agreement, dated June 1, 1995, between ERT West, Inc.
and Casino Software Corporation of America.
6.2 Lease Agreement, dated August 21, 1995, between Park 2000
Associates and Casino Software Corporation of America and
Addendum for Lease Extension thereto.
6.3 Lease Agreement, dated April 16, 1996, between Park 2000
Associates and Casino Software Corporation of America.
6.4 CasinoWare Support and Maintenance Agreement, dated July 27,
1995, between ComputerHelp Resources, Inc. and The Casino
Software Corporation of America.
14 Form F-X, Appointment of Agent for Service of Process, dated
May 24, 1996.
58
<PAGE>
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
CSCC CASINO SOFTWARE CORPORATION
-----------------------------------
(Registrant)
By ROLAND M. THOMAS
-------------------------------
Roland M. Thomas, President
Dated: May 28, 1996
59
NUMBER: 491566
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
CERTIFICATE OF INCORPORATION
I HEREBY CERTIFY that
ENTERTAINMENT RESEARCH TECHNOLOGIES (B.C.) INC.
has this day been incorporated under the Company Act
ISSUED under my hand at Victoria, British Columbia
on March 01, 1995
JOHN S. POWELL
Registrar of Companies
<PAGE>
FORM 1
(Section 5)
"COMPANY ACT"
MEMORANDUM
I wish to be formed into a company with limited liability under the Company
Act in pursuance of this Memorandum.
1. The name of the company is ENTERTAINMENT RESEARCH
TECHNOLOGIES (B.C.) INC.
2. The authorized capital of the company consists of 50,000,000 Common
shares without par value.
3. I agree to take the number of shares in the company set opposite my
name.
- -------------------------------------------------------------------------------
FULL NAME, RESIDENT ADDRESS NUMBER, CLASS AND KIND OF
AND OCCUPATION OF SUBSCRIBER SHARES TAKEN BY SUBSCRIBER
- -------------------------------------------------------------------------------
WILLIAM P. WORK
- ----------------------------------
WILLIAM P. WORK 1 Common share
301, 2440 Haywood Avenue without par value
West Vancouver, B.C.
V7V 1Y1
Barrister and Solicitor
TOTAL SHARES TAKEN: 1 Common share
without par value
- -------------------------------------------------------------------------------
Dated the 22nd day of February, 1995
<PAGE>
NUMBER: 491566
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I HEREBY CERTIFY that
ENTERTAINMENT RESEARCH TECHNOLOGIES (B.C.) INC.
has this day changed its name to
CSCC CASINO SOFTWARE CORPORATION
ISSUED under my hand at Victoria, British Columbia
on April 10, 1995
JOHN S. POWELL
Registrar of Companies
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 491566
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
Company on the date stated:
Name of Company: ENTERTAINMENT RESEARCH
TECHNOLOGIES (B.C.) INC.
Date resolution passed: March 2, 1995
Resolution:
RESOLVED THAT:
1. The name of the Company be changed from ENTERTAINMENT RESEARCH
TECHNOLOGIES (B.C.) INC. to CSCC CASINO SOFTWARE CORPORATION and that
paragraph 1 of its Memorandum be altered accordingly.
2. The form of altered Memorandum attached hereto be approved and adopted
by the Company.
Certified a true copy the 6th day of April, 1995
(Signature)________________________________
Solicitor
(Relationship to Company)________________________________
<PAGE>
ALTERED MEMORANDUM
OF
ENTERTAINMENT RESEARCH TECHNOLOGIES (B.C.) INC.
(as altered by Special Resolution
dated March 2, 1995)
1. The name of the company is CSCC CASINO SOFTWARE CORPORATION
2. The authorized capital of the company consists of 50,000,000 Common
shares without par value.
ARTICLES
TABLE OF CONTENTS
PART SUBJECT PAGE
- ---- ------- ----
1 INTERPRETATION 1
2 ISSUE OF SHARES 1
3 SHARE CERTIFICATES 3
4 TRANSFER OF SHARES, GENERAL 3
5 TRANSMISSION OF SHARES 4
6 BORROWING AND CAPITAL 4
7 MEETINGS 6
8 PROCEEDINGS AT GENERAL MEETINGS 6
9 VOTES OF MEMBERS 9
10 DIRECTORS 11
11 INDEMNIFICATION 14
12 PROCEEDINGS OF DIRECTORS 16
13 OFFICERS 18
14 EXECUTION OF INSTRUMENTS 18
15 DIVIDENDS 19
16 ACCOUNTS 20
17 NOTICES 20
<PAGE>
ARTICLES
OF
ENTERTAINMENT RESEARCH TECHNOLOGIES (B.C.) INC.
PART 1 - INTERPRETATION
1.1 In these Articles, unless the context otherwise requires:
(a) "directors" means the director or directors of the Company
for the time being;
(b) "Company Act" means the Company Act of the Province of
British Columbia from time to time in force and all
amendments thereto and all Regulations and amendments thereto
made pursuant to that Act;
(c) "register" means the register of members to be kept pursuant
to the Company Act;
(d) "registered address" of a member means his address as
recorded in the register;
(e) "registered address" of a director means his address as
recorded in the Company's register of directors to be kept at
the records office of the Company pursuant to the Company
Act.
1.2 Words importing the singular include the plural and vice versa, and
words importing a male person include a female person and a
corporation.
1.3 The definitions in the Company Act in force and as amended from time
to time shall, with necessary changes and so far as applicable,
apply to these Articles.
1.4 The regulations contained in Table A in the First Schedule to the
Company Act shall not apply to the Company.
PART 2 - ISSUE OF SHARES
2.1 Subject to the Company Act and to these Articles, the issue of
shares of the Company shall be under the control of the directors
who may, subject to the rights of holders of shares of the Company
for the time being outstanding, allot or otherwise dispose of,
and/or grant options on, shares authorized but not yet issued at
such times and to such persons, including directors, and in such
manner and upon such terms and conditions and at such price or for
such consideration as the directors in their absolute discretion may
determine.
<PAGE>
- 2 -
2.2 Whenever the Company is not a reporting company, the directors,
before allotting any shares, shall first offer those shares pro rata
to the members, but where there are classes of shares, the directors
shall first offer the shares to be allotted pro rata to the members
holding shares of the class proposed to be allotted, and, if any
shares remain, the directors shall then offer the remaining shares
pro rata to the other members. The offer shall be made by notice
specifying the number of shares offered and the time, which shall be
not less than 7 days, for acceptance of the offer. After the
expiration of the time for acceptance or on receipt of written
confirmation from the person to whom such an offer is made that he
declines to accept the offer, and where there are no other members
holding shares who should first receive an offer, the directors may,
for three months thereafter, offer shares to such persons and in
such manner as they think most beneficial to the Company, but the
offer to those persons shall not be at a price less than, or on
terms more favourable than, the offer to the members. Whenever the
Company is a reporting company, the directors may allot and issue
its shares at such times and in such manner and to such persons or
class of persons as the directors may determine and the Company Act,
the Securities Act, and all other applicable laws permit.
2.3 When the Company is authorized to issue shares without par value,
the directors are authorized to determine the price or consideration
for which such shares shall be allotted or issued, and
notwithstanding that the price or consideration for a share may be
other than cash, the price or consideration for a share shall, at
the time when the share is allotted, be expressed in terms of money
and so recorded in the proceedings of the directors of the Company.
2.4 No share shall be issued until the Company has received the full
consideration therefor in cash, property, or services, provided
that:
a) a document or book account evidencing indebtedness of the
allottee does not constitute property;
b) services shall be past services actually performed for the
Company; and,
c) the value of property or services shall be the value the
directors determine by resolution to be, in all the
circumstances of the transaction, the fair market value.
2.5 Subject to the provisions and restrictions contained in the Company
Act applicable to the shares without par value or otherwise, the
Company may pay a commission or allow a discount in an amount not
exceeding 25% of the amount of the subscription price to any person
in consideration of his subscribing or agreeing to subscribe, or
procuring or agreeing to procure subscriptions, whether absolutely
or conditionally for shares The Company may pay such brokerage as
may be lawful.
<PAGE>
- 3 -
PART 3 - SHARE CERTIFICATES
3.1 Every share certificate issued by the Company shall be in such form
as the directors approve and shall comply with the requirements of
the Company Act.
3.2 If any share certificate is worn out or defaced, then upon
production of that certificate to the directors or the transfer
agent of the Company, the directors or that transfer agent may
declare the same to be cancelled and cause it to be so marked and
may issue a new certificate in place of the certificate cancelled.
If any share certificate is lost or destroyed, then, upon proof of
the loss or destruction to the satisfaction of the directors, and
upon giving such indemnity as the directors deem adequate, a new
certificate shall be issued to the party entitled to it. In any such
case where a new share certificate is issued, the fee prescribed in
these Articles must be paid if requested.
3.3 A share certificate registered in the names of two or more persons
shall be delivered to the person first named on the register.
PART 4 - TRANSFER OF SHARES, GENERAL
4.1 Subject to the restrictions, if any, set forth in these Articles,
any member may transfer his shares by instrument in writing executed
by or on behalf of such member and delivered to the Company or its
transfer agent. The instrument of transfer of any share of the
Company shall be in the form, if any, on the back of the certificate
of the share being transferred, or in any other form which the
directors may approve. If the directors so require each instrument
of transfer shall be in respect of only one class of shares.
4.2 Every instrument of transfer shall be executed by the transferor and
left at the registered office of the Company or at an authorized
office of its transfer agent for registration, together with the
certificate for the shares to be transferred and such other
evidence, if any, as the directors or the transfer agent may require
to prove the title of the transferor or his right to transfer the
shares. All instruments of transfer which are registered shall be
retained by the Company or its transfer agent, but any instrument of
transfer where the transfer is not registered shall be returned to
the person depositing the same, together with the share certificate
which accompanied the same when tendered for registration. The
transferor shall remain the holder of the share until the name of
the transferee is entered on the register in respect of that share.
4.3 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon the form of transfer constitutes an
authority to the Company to register the shares specified in the
form of transfer in the name of the person named in that form as
transferee or, if no person is so named, then in any name designated
in writing by the person depositing the share certificate and the
form of transfer with the Company or its
<PAGE>
- 4 -
agents. The Company or its transfer agent may require proof or
guarantee of the signature of any transferor.
4.4 Neither the Company nor any director, officer or agent is bound to
enquire into the title of the transferee of shares to be
transferred, nor is any such person liable to the registered or any
intermediate owner of the shares for registering the transfer.
4.5 The Company may keep its register of members either at its records
office or at any office in the Province of British Columbia of a
trust company registered under the Trust Company Act, and may keep,
or cause to be kept within the Province by a trust company
registered as aforesaid, one or more branch registers of members.
4.6 Whenever the Company is a reporting company, but not otherwise, it
may cause one or more branch registers of members to be kept outside
the Province of British Columbia.
PART 5 - TRANSMISSION OF SHARES
5.1 In the case of the death or bankruptcy of a member, his personal
representative or trustee in bankruptcy shall be the only person
recognized by the Company as having any title to or interest in the
shares registered in the name of the deceased. Before recognizing
any personal representative or trustee in bankruptcy the directors
may require him to produce and deposit the documents required by the
Company Act.
5.2 Notwithstanding anything otherwise provided in these Articles, if a
person becomes entitled to a share as a result of an order of a
Court of competent jurisdiction or pursuant to a statute, then, upon
producing such evidence as the directors think sufficient that he is
so entitled, such person may be registered as holder of the share.
PART 6 - BORROWING AND CAPITAL
6.1 Subject to any restriction which may from time to time be included
in the memorandum of the Company or these Articles or contained in
the Company Act or the terms, rights or restrictions of any shares
or securities of the Company outstanding, the directors may at their
discretion authorize the Company to borrow any sum of money and may
raise or secure the repayment of such sum in such manner and upon
such terms and conditions, in all respects, as they think fit, and
in particular, and without limiting the generality of the foregoing,
by the issue of bonds or debentures, or any mortgage or charge,
whether specific or floating, or by granting any other security on
the undertaking, or the whole or any part of the property, of the
Company, both present and future.
<PAGE>
- 5 -
6.2 The directors may make any debentures, bonds or other debt
obligations issued by the Company, by their terms assignable free
from any equities between the Company and the person to whom they
may be issued or any other person who lawfully acquires the same by
assignment, purchase, or otherwise, howsoever.
6.3 The directors may authorize the issue of any debentures, bonds or
other debt obligations of the Company at a discount, premium or
otherwise, and with special or other rights or privileges as to
redemption, surrender, entitlement to interest or share of income,
allotment of, or conversion into, or exchange for shares, attendance
at general meetings of the Company, and otherwise as the directors
may determine at or before the time of issue, but no debenture shall
be issued which the Company has not the power to reissue until the
members by resolution determine such debenture shall be cancelled
unless such debenture expressly provides by its terms that it shall
not be reissued. The Company may cause one or more branch registers
of its debentureholders to be kept.
6.4 The Company by ordinary resolution of the members and insofar as the
Company Act shall permit, may alter its memorandum to increase its
authorized capital by:
a) creating shares with par value, or shares without par value,
or both;
b) increasing the number of shares with par value, or shares
without par value, or both;
c) increasing the par value of a class of shares with par value,
if no shares of that class are issued; or
d) creating shares of different classes with special rights or
restrictions.
6.5 The Company may, by resolution of the directors and subject to the
provisions of the Company Act and the specific provisions of any
special rights or restrictions attached to any class or classes of
its shares, purchase or otherwise acquire any of its shares if, at
the time of the proposed purchase or acquisition the Company is not
insolvent or likely to be rendered insolvent by such purchase or
acquisition and if, where a proposed purchase of shares is not to be
made through a stock exchange, the Company shall make its offer to
purchase pro rata to every member who holds shares of the class or
kind to be purchased unless the Company is purchasing shares from a
dissenting member pursuant to the Company Act.
6.6 The Company may, by resolution of the directors and subject to the
provisions of the Company Act and the specific provisions of any
special rights or restrictions attached to any class or classes of
its shares by the Memorandum or these Articles, redeem any of its
issued shares that have a right of redemption attached thereto
provided that at the time of such redemption the Company is not
insolvent or likely to be rendered insolvent by such redemption and
where the Company proposes to redeem some, but not all, of its
shares of a particular class or kind, the directors shall have
absolute discretion to determine in such manner as they deem proper
which shares shall be redeemed, and,
<PAGE>
- 6 -
without limiting the generality of the foregoing, may redeem shares
which have been purchased by the Company in priority to shares which
are held by members.
PART 7 - MEETINGS
7.1 Meetings of the Company shall be held at such time and place, in
accordance with the Company Act, as the directors appoint, and,
unless otherwise specifically provided, the provisions of these
Articles relating to meetings shall apply with necessary changes to
a meeting of members holding a particular class of shares.
7.2 Every meeting, other than an annual general meeting or a class
meeting, shall be called an extraordinary general meeting.
7.3 The directors may, whenever they think fit, convene an extraordinary
general meeting.
7.4 Notice of a meeting shall specify the place, the day and the hour of
meeting, and, in case of special business, the general nature of
that business. The accidental omission to give notice of any meeting
to, or the non-receipt of any notice by, any of the members entitled
to receive notice, shall not invalidate any proceedings at that
meeting.
7.5 If any special business includes the presenting, considering,
approving, ratifying or authorizing the execution of any document,
then the portion of any notice relating to that document is
sufficient if it states that a copy of the document or proposed
document is or will be available for inspection by members at an
office of the Company in the Province of British Columbia or at one
or more designated places in the Province during business hours on
any specified or unspecified business day or days prior to the date
of the meeting, and at the meeting.
PART 8 - PROCEEDINGS AT GENERAL MEETINGS
8.1 The following business at a general meeting shall be deemed to be
special business:
(a) All business at an extraordinary general meeting;
(b) All business that is transacted at an annual general meeting,
with the exception of the consideration of the financial
statements and the report of the directors and auditors, the
election of directors, the appointment of the auditors and
such other business as, under these Articles or in accordance
with the Company Act, ought to be transacted at an annual
general meeting or is business which is brought under
consideration by the report of the directors issued with the
notice convening the meeting;
<PAGE>
- 7 -
and no special business shall be conducted at any meeting unless
notice of that business has been given to the members in accordance
with these Articles or members holding at least 75% of the shares
entitled to be voted at that meeting are present and consent to the
conduct of such business.
8.2 No business, other than the election of a chairman and the
adjournment or termination of the meeting, shall be conducted at any
meeting at any time when a quorum is not present. A quorum shall be
two persons holding or representing by proxy not less than one-tenth
of the outstanding shares of the Company which are entitled to be
voted at the meeting, unless the Company has only one member, in
which case the quorum shall be that member who may conduct the
business of the Company by proceedings recorded in writing and
signed by him. If at any time during a meeting there ceases to be a
quorum present, any business then in progress shall be suspended
until there is a quorum present or until the meeting is adjourned or
terminated, as the case may be.
8.3 If within half an hour from the time appointed for a meeting a
quorum is not present, the meeting, if convened upon the requisition
of members, shall be terminated. In any other case, it shall stand
adjourned to the same day in the next week, at the same time and
place, and if, at the adjourned meeting, a quorum is not present
within half an hour from the time appointed for the meeting, the
member or members present shall be a quorum.
8.4 Subject to Article 8.5, the chairman of the directors, if there is
one, whom failing the president of the Company, whom failing one of
the directors present chosen by the directors from among their
number, shall preside as chairman of every meeting.
8.5 If at any general meeting there is no chairman or president or
director present within fifteen minutes after the time appointed for
holding the meeting, or if the chairman or president and all the
directors present are unwilling to act as chairman, the members
present shall choose some one of their number to be chairman.
8.6 The chairman of a meeting may, with the consent of any meeting at
which a quorum is present, and shall, if so directed by the meeting,
adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other than
the business left unfinished at the meeting from which the
adjournment took place. When a meeting is adjourned for thirty days
or more, notice of the adjourned meeting shall be given as in the
case of the original meeting. Except as aforesaid, it is not
necessary to give any notice of an adjournment or of the business to
be transacted at an adjourned meeting.
8.7 No resolution proposed at a meeting need be seconded, and the
chairman of any meeting is entitled to move or propose a resolution.
<PAGE>
- 8 -
8.8 In case of an equality of votes the chairman shall not, either on a
show of hands or on a poll, have a casting or second vote in
addition to the vote or votes to which he may be entitled as a
member, which vote or votes he is entitled to cast without vacating
the chair.
8.9 In the case of any dispute as to the admission or rejection of a
proxy or a vote, the chairman shall determine the same and his
determination, made in good faith, is final and conclusive.
8.10 A member entitled to more than one vote need not, if he votes, use
all his votes or cast all the votes he uses in the same way.
8.11 Subject to these Articles, if a poll is duly demanded it shall be
taken in such manner as the chairman directs within 7 days of the
demand for the same. The result of the poll shall be deemed to be
the resolution of the meeting at which the poll is demanded. A
demand for a poll may be withdrawn at any time before it has been
taken.
8.12 A poll demanded on a question of adjournment shall be taken at the
meeting without adjournment.
8.13 The demand for a poll shall not, unless the chairman so rules,
prevent the continuance of a meeting for the transaction of any
business other than the question on which a poll has been demanded
or questions which depend or bear upon that question.
8.14 Subject always to any contrary or specific provision of the Company
Act, a resolution that has been submitted to all of the members who
would have been entitled to vote thereon in person or by proxy at a
meeting and that has been consented to in writing by such members
holding not less than three-fourths of the shares of the Company
shall be deemed to be an ordinary resolution passed at a meeting.
8.15 Subject always to any contrary or specific provision of the Company
Act, a resolution consented to in writing by every member of the
Company who would have been entitled to vote thereon in person or by
proxy at a meeting shall be deemed to be a special resolution passed
at a meeting.
8.16 Subject always to the provisions of the Company Act, whenever the
Company is not a reporting company, where all the members entitled
to attend and vote at the annual general meeting of the Company
consent in writing to all the business required to be transacted at
the meeting, it is not necessary for the Company to hold that annual
general meeting.
<PAGE>
- 9 -
PART 9 - VOTES OF MEMBERS
9.1 Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a show of hands every member over
the age of eighteen years present in person or by proxy has one
vote, and on a poll every such member present in person or by proxy
has one vote for each share he holds on the record date except that
no member which is a corporation which is a subsidiary of the
Company shall be entitled to vote its shares of the Company, and the
Company itself shall not vote in respect of any share of the Company
that it has redeemed purchased, or otherwise acquired. A guardian of
an infant member shall be entitled to vote the shares registered in
the name of such infant member.
9.2 Any person who is not registered as a member but is entitled to vote
at any meeting in respect of a share, may vote the share in the same
manner as if he were a member, but, unless the directors have
previously admitted his right to vote at that meeting in respect of
the share, if so required by any director he shall satisfy the
directors of his right to vote the share before the time for holding
the meeting, or adjourned meeting, as the case may be, at which he
proposes to vote.
9.3 Where there are joint members registered in respect of any share,
any one of the joint members may vote at any meeting, either
personally or by proxy, in respect of the share as if he were solely
entitled to it. If more than one of the joint members is present at
any meeting, personally or by proxy, the joint member present whose
name stands first on the register in respect of the share shall
alone be entitled to vote in respect of that share. Several
executors or administrators of a deceased member in whose sole name
any share stands shall, for the purposes of this Article, be deemed
joint members.
9.4 Subject to the provisions of the Company Act, a corporation which is
a member and is not a subsidiary of the Company may vote by up to
two duly authorized representatives, who are entitled to speak and
vote, either in person or by proxy, and in all other respects
exercise the rights of a member and those representatives shall be
reckoned as a member for all purposes in connection with any meeting
of the Company.
9.5 A member for whom a committee has been duly appointed may vote,
whether on a show of hands or on a poll, by his committee and that
committee may appoint a proxyholder.
9.6 Unless the directors otherwise determine, the instrument appointing
a proxyholder and the power of attorney or other authority, if any,
under which it is signed, or a notarially certified copy thereof,
shall be deposited at a place specified for that purpose in the
notice convening the meeting, not less than forty-eight hours before
the time for holding the meeting at which the proxyholder proposes
to vote, or, if no such place is specified, then it shall be
deposited with the chairman of the meeting prior to the commencement
of the meeting.
<PAGE>
- 10 -
9.7 A vote given in accordance with the terms of an instrument of proxy
is valid notwithstanding the previous death or incapability of the
member, or revocation of the proxy, or of the authority under which
the proxy was executed, or the transfer of the share in respect of
which the proxy is given, if, but only if, no prior notice in
writing of the death, incapability, revocation or transfer has been
received at the registered office of the Company or by the chairmen
of the meeting or adjourned meeting before the vote is given.
9.8 Unless, in the circumstances, the Company Act requires any other
form of proxy, an instrument appointing a proxyholder, whether for a
specified meeting or otherwise, shall be in the form following, or
in any other form that the directors shall approve:
(Name of the Company)
The undersigned hereby appoints ______________________ of _____________
____________________ or failing him ___________________________________
as proxy for the undersigned to attend at and vote for and on behalf
of the undersigned at the meeting of the Company to be held on the ____
day of __________________, 19__ and at any adjournment of that meeting.
Signed this _____ day of ___________________, 19__.
Signature of Member or
Authorized Officer of
a Corporate Member)
Number of Shares _______________________________
PRINT NAME OF MEMBER BELOW
_________________________ _______________________________
9.9 A proxy or an instrument appointing a duly authorized representative
of a corporation shall be in writing, under the hand of the
appointor or of his attorney duly authorized in writing, or, if such
appointor is a corporation, either under its seal or under the hand
of an officer or attorney duly authorized.
9.10 Any person may act as a proxyholder whether or not he is entitled on
his own behalf to be present and to vote at the meeting at which he
acts as proxy holder.
<PAGE>
- 11 -
PART 10 - DIRECTORS
10.1 The subscriber or subscribers to the Memorandum or, where the
Articles have come into force after the incorporation of the
Company, then the directors holding office at the coming into force
of these Articles, shall be the directors of the Company unless and
until such person:
a) dies;
b) resigns in writing;
c) is no longer qualified in accordance with these Articles or
the Company Act; or
d) is removed from office by special resolution of the members.
10.2 The management of the business of the Company shall be vested in the
directors and the directors may exercise all such powers and do all
such acts and things as the Company may exercise and do which are
not by these Articles or by the Company Act or otherwise lawfully
directed or required to be exercised or done by the Company in
general meeting, but subject, nevertheless, to the provisions of all
laws affecting the Company and of these Articles and to any rules,
not being inconsistent with these Articles which are made from time
to time by the Company in general meeting, provided that no rule
made by the Company in general meeting shall invalidate any prior
act of the directors that would have been valid if that rule had not
been made.
10.3 The number of directors shall be at least one as long as the Company
is not a reporting company, and shall be at least three whenever the
Company is a reporting company. Subject to the foregoing, the number
of directors may be determined from time to time by resolution of
the directors themselves, and provided that the number of directors
holding office shall not fall below the minimum numbers above
mentioned, the number of directors shall be automatically reduced
upon the death, resignation, removal or disqualification of any
director and automatically increased upon the appointment of any
additional director or directors in accordance with these Articles.
10.4 A director is not required to hold a share of the Company as
qualification to be a director, but in order to be qualified he must
not be:
a) under the age of eighteen years; or,
b) found to be incapable of managing his own affairs by reason
of mental infirmity; or,
c) a corporation; or,
d) an undischarged bankrupt; or,
<PAGE>
- 12 -
e) unless the Supreme Court of British Columbia orders
otherwise, convicted within or without the Province of
British Columbia of an offence
(i) in connection with the promotion, formation, or
management of a corporation; or,
(ii) involving fraud,
unless five years have elapsed since the expiration of the
period fixed for suspension of the passing of sentence
without sentencing, or since a fine was imposed, or the term
of imprisonment and probation imposed, if any, was concluded,
whichever is the latest, but the disability imposed by this
clause ceases upon a pardon being granted under the Criminal
Records Act (Canada);
and every director must not be subject to any other
disqualifications as to office according to the Company Act,
provided always that no person who is not ordinarily resident in
Canada shall be appointed a director of the Company if, upon his
appointment, the majority of the directors of the Company would not
be persons ordinarily resident in Canada.
10.5 In the event of the death, resignation, removal or disqualification
of a director and his consequent vacating of office in accordance
with these Articles or the Company Act in circumstances in which the
majority of the directors of the Company would thereafter not be
persons ordinarily resident in Canada, then the last appointed
director who is not ordinarily resident in Canada shall, ipso facto,
be disqualified from office and be no longer a director of the
Company. In the event there are on the happening of such an event
two or more persons who are not ordinarily resident in Canada who
were last appointed and appointed at the same time, then the
Secretary shall determine by lot which of the two or more so last
appointed shall have ceased to hold office by reason of this
paragraph.
10.6 If the Company removes any director by special resolution, it may by
ordinary resolution, appoint another person in his stead.
10.7 The directors have power at any time and from time to time to
appoint any qualified person as a director, and the number of
directors shall be automatically increased upon and by any such
appointment.
10.8 Any person not being a member of the Company who becomes a director
shall be deemed to have agreed to be bound by the provisions of the
Articles to the same extent as if he were a member of the Company.
10.9 Subject to the provisions of any ordinary resolution, the
remuneration of the directors as such may from time to time be
determined by the directors themselves, and such remuneration may be
in addition to any salary or other remuneration paid to any officer
<PAGE>
- 13 -
or employee of the Company as such, who is also a director. The
directors shall be repaid such reasonable expenses as they may incur
in and about the business of the Company, and if any director shall
perform any professional or other services for the Company that are
outside the ordinary duties of a director, or shall otherwise be
specifically occupied in or about the Company's business, he may be
paid a special remuneration to be fixed by the directors in addition
to any other remuneration that he may be entitled to receive and the
same shall be charged as part of the ordinary working expenses.
Unless otherwise determined by ordinary resolution, the directors on
behalf of the Company may pay a gratuity or pension or allowance on
retirement to any person who has held any office of employment with
the Company or to his spouse or dependents and may make
contributions under any plan or to any fund and pay premiums for the
purchase or provision of any such gratuity, benefit, pension or
allowance.
10.10 The directors may from time to time and at any time by power of
attorney appoint any company, firm or person or body of persons to
be the attorney or attorneys of the Company for such purposes and
with such powers, authorities and discretion, not exceeding those
vested in or exercisable by the directors under these Articles, and
for such period, and subject to such conditions, as they may think
fit.
10.11 A director who is in any way directly or indirectly interested in a
proposed contract or transaction with the Company shall disclose the
nature and extent of his interest at a meeting of the directors in
accordance with the provisions of the Company Act. A director shall
not vote in respect of any contract or transaction with the Company
in which he is interested, and if he shall do so his vote shall not
be counted, but he may be counted in the quorum present at the
meeting at which such vote is taken.
10.12 A director may hold any office or place of profit under the Company
other than auditor, for such period, and on such terms as to
remuneration or otherwise, as the directors may determine. Subject
to compliance with the Company Act, no director shall be
disqualified by his office from contracting with the Company either
with regard to his tenure of any office or place of profit or as
vendor, purchaser or otherwise.
10.13 Any director may act by himself or his firm in any professional
capacity for the Company except as auditor, and he or his firm shall
be entitled to remuneration for professional services as if he were
not a director.
10.14 Any director may, from time to time, appoint by written instrument
delivered to the Secretary any person of whom the directors approve
to be his alternate director. The appointee, while he holds office
as alternate director, shall be entitled to notice of meetings of
the directors and, in the absence of the director for whom he is an
alternate, to attend and vote thereat as a director or sign any
resolution of directors to be consented to in writing, but an
alternate director shall not be entitled to be remunerated otherwise
than out of the remuneration of the director appointing him. Any
director may make or revoke an appointment of his alternate director
by notice in writing or by telegram or cable to be delivered or
addressed, postage or other charges prepaid, to the registered
<PAGE>
- 14 -
office of the Company. The directors may by resolution revoke any
appointment of an alternate director. No person shall act as an
alternate for more than one director at any given time. If an
alternate director is already a director of the Company, he shall be
entitled to two votes if the director making such appointment ceases
to be a director, the person appointed by him shall cease to be an
alternate director.
10.15 At each annual general meeting of the Company all the directors
shall retire from office, but are eligible for reelection and the
Company shall elect a Board of Directors consisting of the number of
directors so retiring or determined by resolution or recommendation
of the directors. If in any calendar year the Company does not hold
an annual general meeting the directors then in office shall be
deemed to have been elected as directors on the last day on which
the meeting should have been held pursuant to the Company Act, and
the directors so elected may hold office until other directors are
appointed or elected or until the day on which the next annual
general meeting is held.
PART 11 - INDEMNIFICATION
11.1 The Company shall indemnify any director, officer, employee or agent
of the Company who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or proceeding
and whether civil, criminal or administrative, by reason of the fact
that he is or was a director, officer, employee, or agent of the
Company or any act or thing occurring at a time when he is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all costs, charges and
expenses, including legal fees and any amount paid to settle the
action or proceeding or satisfy a judgment, if he acted honestly and
in good faith with a view to the best interests of the corporation
or other legal entity or enterprise as aforesaid of which he is or
was a director, officer, employee or agent, as the case may be, and
exercised the care, diligence and skill of a reasonably prudent
person, and with respect to any criminal or administrative action or
proceeding, he had reasonable ground for believing that his conduct
was lawful; provided that no indemnification of a director or former
director of the Company, or director or former director of a
corporation in which the Company is or was a shareholder, shall be
made except to the extent approved by the Court pursuant to the
Company Act or any other statute. The determination of any action,
suit or proceeding by judgment, order, settlement, conviction or
otherwise shall not, of itself, create a presumption that the person
did not act honestly and in good faith and in the best interests of
the Company and did not exercise the care, diligence and skill of a
reasonably prudent person and, with respect to any criminal action
or proceeding, did not have reasonable grounds to believe that his
conduct was lawful.
11.2 The Company shall indemnify any person in respect of any loss,
damage, costs or expenses whatsoever incurred by him while acting as
an officer, employee or agent for the Company unless such loss,
damage, costs or expenses shall arise out of failure to comply with
instructions, wilful act or default or fraud by such person, in any
of which
<PAGE>
- 15 -
events the Company shall only indemnify such person if the
directors, in their absolute discretion, so decide or the Company by
ordinary resolution shall so direct.
11.3 The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification
may be entitled under any other Article, or any valid and lawful
agreement, vote of members or disinterested directors or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent
and shall enure to the benefit of the heirs, executors and
administrators of such person The indemnification provided by this
Article shall not be exclusive of any powers, rights, agreements or
undertakings which may be legally permissible or authorized by or
under any applicable law. Notwithstanding any other provisions set
forth in this Article, the indemnification authorized by this
Article shall be applicable only to the extent that any such
indemnification shall not duplicate indemnity or reimbursement which
that person has received or shall receive otherwise than under this
Part.
11.4 The directors are authorized from time to time to cause the Company
to give indemnities to any director, officer, employee, agent or
other person who has undertaken or is about to undertake any
liability on behalf of the Company or any corporation controlled by
it.
11.5 Subject to the Company Act, no director or officer or employee for
the time being of the Company shall be liable for the acts,
receipts, neglects or defaults of any other director or officer or
employee, or for joining in any receipt or act for conformity, or
for any loss, damage or expense happening to the Company through the
insufficiency or deficiency of title to any property acquired by
order of the Board for the Company, or for the insufficiency or
deficiency of any security in or upon which any of the moneys of or
belonging to the Company shall be invested or for any loss or
damages arising from the bankruptcy, insolvency, or tortious act of
any person, firm or corporation with whom or which any moneys,
securities or effects shall be lodged or deposited or for any loss
occasioned by any error of judgment or oversight on his part or for
any other loss, damage or misfortune whatever which may happen in
the execution of the duties of his respective office or trust or in
relation thereto unless the same shall happen by or through his own
wilful act or default, negligence, breach of trust or breach of
duty.
11.6 Directors may rely upon the accuracy of any statement of fact
represented by an officer of the Company to be correct or upon
statements in a written report of the auditor of the Company and
shall not be responsible or held liable for any loss or damage
resulting from the paying of any dividends or otherwise acting in
good faith upon any such statement.
11.7 The directors may cause the Company to purchase and maintain
insurance for the benefit of any person who is or was a director,
officer, employee or agent of the Company or is or was serving at
the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability incurred by him as a director,
officer, employee or agent.
<PAGE>
- 16 -
PART 12 - PROCEEDINGS OF DIRECTORS
12.1 The directors, when there is more than one, may meet together at
such places and upon such notice as they think fit for the dispatch
of business, adjourn and otherwise regulate their meetings and
proceedings as they see fit. The quorum shall be a majority of the
directors then in office, and when an even number of directors are
holding office, shall be one more than half of their number. Unless
and until the directors shall elect one of their number to be
chairman of the directors, the president of the Company shall be
chairman of all meetings of the directors; but if at any meeting a
chairman elected by the directors or the president is not present
within thirty minutes after the time appointed for holding the
meeting, the directors present may choose some one of their number
to be chairman at that meeting. Any director may waive notice of any
meeting of directors. Accidental omission to give notice of a
meeting of directors to, or non-receipt of notice by, any director,
shall not invalidate the proceedings of any meeting of the
directors.
12.2 The Directors may participate in a meeting of the Directors by means
of telephone or other communications facility by means of which all
Directors participating in the meeting can hear and speak to each
other. A meeting so held in accordance with this Article shall be
deemed to be an actual meeting of the board and any resolution
passed at such meeting shall be as valid and effectual as if it had
been passed at a meeting where the Directors are physically present.
A Director participating in a meeting in accordance with this
Article shall be deemed to be present at the meeting and to have so
agreed and shall be counted in the quorum therefor and be entitled
to speak and vote thereat.
12.3 The directors, or any committee of directors, may take any action
required or permitted to be taken by them and may exercise all or
any of the authorities, powers and discretion for the time being
vested in or exercisable by them by resolution either passed at a
meeting at which a quorum is present or authorized by resolution
consented to in writing signed by all the directors in accordance
with the Company Act.
12.4 The directors may delegate any, but not all, of their powers to
committees consisting of such director or directors as they think
fit. Any committee so formed in the exercise of the powers so
delegated shall conform to any rules that may from time to time be
imposed on it by the directors, and shall report every act or thing
done in exercise of those powers to the first meeting of the
directors held after it has been done.
12.5 A committee of more than one director may elect a chairman of its
meetings and if no chairman is elected, or if at any meeting the
chairman is not present within thirty minutes after the time
appointed for holding the meeting, the directors present who are
members of the committee may choose one of their number to be
chairman of the meeting.
<PAGE>
- 17 -
12.6 The member or members of a committee may govern their procedure as
they think proper, subject to any rules imposed by the directors.
Questions arising shall be determined by the member, if there be
only one, or by a majority of votes of the members present, but in
case of an equality of votes the chairman of a committee shall not
have a second or casting vote.
12.7 Any director of the Company who may be absent from the Province of
British Columbia may file at the registered office of the Company by
letter, telegram, telex or cable, a waiver of notice of any meeting
of the directors and may, at any time and by one of the means
mentioned aforesaid, withdraw the waiver, but until the waiver is
withdrawn, no notice of meetings of directors need be sent to that
director, and any and all meetings of the directors of the Company
held after receipt of such waiver and held prior to its withdrawal
shall, provided a quorum of the directors is present, be valid and
effective without notice of such meeting given to that director.
12.8 Any director who expects he may be absent from a specific meeting of
the directors may, by letter, telegram, telex or cable sent to the
Secretary of the Company at its registered office or at the place
where the meeting is to be held, appoint some other director to be
his proxy for the purpose of voting at such meeting either for an
adjournment of the meeting, or for the postponement of discussion of
any matter which may come before the meeting, or in favour of any
matter specified in such letter, telegram, telex or cable, but no
such appointment shall empower any proxy to vote at any such meeting
in favour of any matter other than is specifically mentioned in the
letter, telegram, telex or cable appointing such proxy.
12.9 Questions arising at any meeting of the directors shall be decided
by a majority of votes. In case of an equality of votes, the
chairman shall not have a second or casting vote.
12.10 No resolution proposed at a meeting of directors need be seconded,
and the chairman of any meeting is entitled to move or propose and
vote upon a resolution of the directors.
12.11 Any resolution or proceeding recorded in writing and signed by all
of the directors shall be deemed to be a valid resolution or
proceeding of the directors just as if the same had been adopted or
enacted at a meeting of the directors duly called and convened with
a quorum present, and at any time when there is only one director of
the Company, all business required or desired to be conducted by the
director may be enacted by proceedings in writing signed by the
director.
12.12 All acts done by any meeting of the directors or by a committee of
directors or by any person acting as a director shall,
notwithstanding that it shall be afterwards discovered that there
was some defect in the appointment of any such director or person
acting as aforesaid, or that they or any of them were disqualified
be as valid as if every such person had been duly appointed and was
qualified to be a director.
<PAGE>
- 18 -
PART 13 - OFFICERS
13.1 The Company shall have a President and a Secretary whom the
directors shall appoint. The President of the Company, and the
Chairman of the directors, if any, shall be directors of the
Company. Except when the Company has only one member, the President
and Secretary shall be different persons.
13.2 All appointments of officers shall be made at such remuneration,
whether by way of salary, fee, commission, participation in profits,
or otherwise, as the directors think fit, and every appointment of
an officer by the directors shall be in force until revoked by the
directors or until the death or resignation in writing of the
officer unless otherwise provided in the resolution of appointment.
13.3 Every officer of the Company who holds any office or possesses any
property whereby, whether directly or indirectly, duties or
interests might be created in conflict with his duties or interests
as an officer of the Company shall, in writing, disclose to the
President the fact and the nature, character and extent of the
conflict.
PART 14 - EXECUTION OF INSTRUMENTS
14.1 The directors may, but shall not be required to, provide a common
seal for the Company. They shall have power from time to time to
destroy the same or substitute a new seal in place of the seal
destroyed or to cause the affairs of the Company to be conducted
without a common seal. In the event a seal is provided, then unless
otherwise provided by the directors, the same may be affixed to any
document obligating the Company signed by the President and the
Secretary, or to any certificate of the Company signed by the
Secretary alone.
14.2 Subject to the provisions of the Company Act, the directors may
provide for use in any other province, state, territory or country
an official seal, which shall be a facsimile of the common seal of
the Company, with the addition on its face of the name of the
province, state, territory or country where it is to be used.
14.3 The signature of any officer of the Company may be printed,
lithographed, engraved or otherwise mechanically reproduced upon all
instruments executed or issued by the Company or any officer
thereof; and, subject to the Company Act, any instrument on which
the signature of any such person is so reproduced, shall be deemed
to have been manually signed by such person whose signature is so
reproduced and shall be as valid to all intents and purposes as if
such instrument had been signed manually, and notwithstanding that
the person whose signature is so reproduced may have ceased to hold
office at the date of the delivery or issue of such instrument. The
term "instrument" as used in this Article shall include all paper
writings.
<PAGE>
- 19 -
PART 15 - DIVIDENDS
15.1 The directors may declare dividends and fix the date of record
therefor and the date for payment thereof.
15.2 Subject to the terms of shares with special rights or restrictions,
all dividends shall be declared according to the number of shares
held.
15.3 Dividends may only be payable out of the profits of the Company. No
dividend shall bear interest against the Company. A transfer of a
share shall not pass the right to any dividend thereon before the
registration of the transfer in the register.
15.4 A resolution declaring a dividend may direct payment of the dividend
wholly or partly by the distribution of specific assets or of
paid-up shares, bonds, debentures or other debt obligations of the
Company, or in any one or more of those ways, and, where any
difficulty arises in regard to the distribution, the directors may
settle the same as they think expedient, and in particular may fix
the value for distribution of specific assets, and may determine
that cash payments shall be made to a member upon the basis of the
value so fixed in place of fractional shares, bonds, debentures or
other debt obligations in order to adjust the rights of all parties,
and may vest any of those specific assets in trustees upon such
trusts for the persons entitled as may seem expedient to the
directors.
15.5 Any dividend or other moneys payable in cash in respect of a share
may be paid by cheque sent through the post to the member in a
prepaid letter, envelope or wrapper addressed to the member at his
registered address, or in the case of joint members, to the
registered address of the joint member who is the first named on the
register, or to such person and to such address as the member or
joint members, as the case may be, in writing direct. Any one of two
or more joint members may give effectual receipts for any dividend
or other moneys payable or assets distributable in respect of a
share held by them.
15.6 No notice of the declaration of a dividend need be given to any
member.
15.7 The directors may, before declaring any dividend, set aside out of
the profits of the Company such sums as they think proper as a
reserve or reserves which shall, at the discretion of the directors,
be applicable for meeting contingencies, or for equalizing
dividends, or for any other purpose to which the profits of the
Company may be properly applied, and pending that application may,
at the like discretion, either be employed in the business of the
Company or be invested in such investments, as the directors may
from time to time think fit, including shares of the Company
purchased or acquired in accordance with these Articles.
<PAGE>
- 20 -
15.8 The directors may capitalize any undistributed surplus on hand of
the Company and may from time to time issue as fully paid and
non-assessable any unissued shares or any bonds, debentures or other
debt obligations of the Company as a dividend representing such
undistributed surplus on hand or any part thereof.
15.9 Should any dividend result in any shareholder being entitled to a
fractional share, the directors shall have the right to pay such
shareholders the cash equivalent of such fractional part, and shall
have the further right to carry out such distribution and to adjust
the rights of the shareholders with respect thereto on as practical
and equitable a basis as possible.
PART 16 - ACCOUNTS
16.1 The directors shall cause records and books of accounts to be kept
as necessary to record properly the financial affairs and conditions
of the Company and to comply with the provisions of the Company Act
and all statutes applicable to the Company.
PART 17 - NOTICES
17.1 A notice may be given to any member or director, either by personal
service or by sending it by post to him in a letter, envelope or
wrapper addressed to the member or director at his registered
address.
17.2 A notice may be given by the Company to joint members in respect of
a share registered in their names by giving the notice to the Joint
member first named in the register of members in respect of that
share.
17.3 A notice may be given by the Company to the persons entitled to a
share in consequence of the death or bankruptcy of a member by
sending it through the post in a prepaid letter, envelope or wrapper
addressed to them by name, or by the title of representatives of the
deceased or trustee of the bankrupt, or by any like description, at
the address, if any, supplied for the purpose by the persons
claiming to be so entitled, or, until that address has been so
supplied, by giving the notice in any manner in which the same might
have been given if the death or bankruptcy had not occurred.
17.4 Any notice or document sent by post to, or left at, the registered
address of any member, shall, notwithstanding that member is then
deceased, and whether or not the Company has notice of his death, be
deemed to have been duly served in respect of any registered shares,
whether held solely or jointly with other persons by that deceased
member, until some other person is registered in his stead as the
member or joint member in respect of those shares, and that service
shall for all purposes of these Articles be deemed a sufficient
service of such notice or document on his personal representatives
and all persons, if any, jointly interested with him in those
shares.
<PAGE>
- 21 -
17.5 Any notice sent by post shall be deemed to have been served on the
second day following that on which the letter, envelope or wrapper
containing the same is posted exclusive of any day upon which the
mail is not regularly delivered or handled in either the place of
posting or the place of delivery, and in proving service it is
sufficient to prove that the letter, envelope or wrapper containing
the notice was properly addressed and put in a Canadian government
post office, postage prepaid, subject always to it being proved by
the person to whom the notice was addressed that the mail was not
regularly delivered or handled as aforesaid on or between the day of
posting and the day of delivery.
17.6 Notice of every general meeting shall be given in the manner
hereinbefore authorized to:
(a) every member holding a share or shares carrying the right to
vote at such meetings on the record date or, if no record
date was established by the directors, on the date of
personal service or mailing;
(b) every person upon whom the ownership of a share has devolved
by reason of his being a legal personal representative or a
trustee in bankruptcy of a member where the member, but for
his death or bankruptcy, would be entitled to receive notice
of the meeting;
(c) the auditor of the Company.
Subject to any provisions in any instrument of the Company or in the
special rights or restrictions attached to any shares, no other
person is entitled to receive notice of general meetings.
I adopt the foregoing Articles prescribing rules for the conduct of the
affairs of the Company.
-----------------------------------
Subscriber
============== ==============
NUMBER SHARES
============== ==============
INCORPORATED IN THE PROVINCE OF BRITISH COLUMBIA
[COMPANY LOGO] SPECIMEN
CSCC CASINO
SOFTWARE
CORPORATION
THIS CERTIFIES THAT
----------------------
CUSIP 125933 10 1
----------------------
is the registered holder of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE in the
Capital of the above named Company subject to the Memorandum and Articles
of the Company transferable on the books of the Company by the registered
holder in person or by Attorney duly authorized in writing upon surrender
of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by the Transfer Agent
and Registrar of the Company.
IN WITNESS WHEREOF the Company has caused this Certificate to be signed on
its behalf by the facsimile signatures of its duly authorized officers at
Vancouver, British Columbia.
DATED
COUNTERSIGNED AND REGISTERED
MONTREAL TRUST COMPANY OF CANADA VANCOUVER
President TRANSFER AGENT AND REGISTRAR
Secretary By
----------------------------------------
Authorized Officer
The Shares represented by this Certificate are transferable at the offices
of Montreal Trust Company of Canada, Vancouver, B.C.
<PAGE>
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL INSURANCE NUMBER OF TRANSFEREE
--- --- --- --- --- --- --- --- ---
- -
--- --- --- --- --- --- --- --- ---
- --------------------------------------------------------------------------------
(Name and address of transferee)
____________________________________________________________________ shares
registered in the name of the undersigned on the books of the Company named
on the face of this certificate and represented hereby, and irrevocably
constitutes and appoints
____________________________________________________________________ the
attorney of the undersigned to transfer the said shares on the register of
transfers and books of the Company with full power of substitution hereunder.
DATED:
- ---------------------------------- -----------------------------------
(signature of Witness) (Signature of Shareholder)
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the certificate, in every particular,
without alteration or enlargement, or any change whatsoever, and
must be guaranteed by a bank, trust company or a member of a
recognized stock exchange.
Signature Guaranteed By:
LEASE AGREEMENT
This agreement is made and entered into this 1st day of June, 1995 by and
between:
LESSOR: ERT West, Inc.
and
LESSEE: Casino Software Corporation of America.
Lessor hereby leases to Lessee and Lessee takes from Lessor the real
property described as follows ( the Premises):
3540 square feet of office and common space located at 2001 Front
Street NE, Suite A, upper level of the south wing, Salem, Oregon
97303 (diagram attached).
FOR CONSIDERATION of the following covenants to be performed, the parties
agree that the terms of this lease are as follows:
1. BUSINESS PURPOSE: The Premises occupied by the Lessee is to be used
specially for the purpose of professional office use. Lessee's primary
business is computer software development involving sales, marketing,
distribution, and administration. There is no product manufacturing aspect
to the Lessee's business. Lessee agrees to continuously operate the
business defined herein at the leased Premises during the lease term.
2. TERM: The term of this lease shall be twenty-nine (29) months commencing
June 1, 1995 and continuing through October 31st, 1997.
3. OPTION TO EXTEND: Lessee, if not in default, shall have the option to
extend this lease for one additional extension term of two (2) years and a
second additional extension term of one (1) year. Each extension term shall
commence on the day following expiration of the preceding term. Notice to
exercise this extension option shall be given 120 days prior to expiration
of the current term. If such notice is given, all terms and conditions of
this lease shall apply during the extension term.
4. RENT: Lessee shall pay monthly base to Lessor in lawful money of the
United States, in advance, on the first day of each month throughout the
term of this lease. Monthly base rent payments during the term of this
lease shall be as follows:
Four thousand dollars ($4000.00) per month for occupiable office space of
3540 square feet.
5. LATE PAYMENT: In the event monthly rent is not received by Lessor within
ten (10) days of the date the payment is due, Lessee agrees to pay a late
payment fee in the amount of 5% of the payment due for each occurrence in
addition to a monthly interest charge of 1% per month accrued on any and
all unpaid rent or other charges due.
<PAGE>
6. UTILITIES, SERVICES, AND OTHER COSTS:
Lessor shall be responsible for payment of the following items:
- water/sewer
- office garbage
- electricity
- exterior landscaping and maintenance
- building maintenance
Lessee shall be responsible for payment of the following items:
- interior custodial services
- telephone,
- other services to the Premises required by Lessee for operation
of their business (such as security or alarm services).
Lessee shall reimburse Lessor on a monthly basis for services
requested by Lessee but paid by Lessor.
7. INSURANCE: Lessee covenants and agrees that Lessee will at all times
indemnify and save Lessor harmless from and against any claims or demands
or causes of action of whatsoever kind or character for damages to persons
or property or otherwise and any and all liability arising out of the use
or misuse of the Premises by Lessee, their agents, servants, employees,
invitees or any persons going thereon while the Premises are in the custody
of Lessee, provided however, that Lessee shall not indemnify or hold
harmless Lessor from or against any claims, demands, or causes of action
arising out the Lessor's gross negligence, recklessness or willful
misconduct. Lessee shall keep and maintain in full force and effect a good
and sufficient liability policy insuring against all losses with respect to
which Lessor is indemnified thereunder with limits of not less than ONE
MILLION DOLLARS ($1,000,000.00) combined single limit.
Lessor shall provide proof, upon Lessee's request, of liability insurance
to Lessee for the term of this lease.
8. CARE OF PREMISES: Lessee agrees to keep and maintain the premises in
good order and repair. Lessor agrees to maintain the building and grounds
in good order and repair.
9. LIENS AND INSOLVENCY: The Lessee shall not permit any liens or
encumbrances of any kind or nature, including liens for labor furnished or
materials supplied on or about the Premises, and shall hold harmless and
indemnify the Lessor from any and all charges or costs incurred thereby. In
the event of the insolvency, bankruptcy, or assignment for the benefit of
creditors of the Lessee, this lease shall immediately terminate and come to
an end and Lessor shall have the right to immediately retake the Premises
without notice or other action of law.
<PAGE>
10. ASSIGNMENT: This lease shall not be assigned by Lessee without first
having obtained written consent from Lessor, which consent shall not be
unreasonably withheld. This lease shall not be assignable by Lessor to the
assignment of the lease, or any interest therein, Lessor shall not be
barred from afterward refusing to consent to any further assignment.
11. DEFAULT AND RE-ENTRY: Time is of the essence in this lease. In the
event Lessee breaches or fails to perform any material term, condition, or
obligation applicable to Lessee under this lease, and said breach of
failure to perform is not cured by Lessee within fifteen (15) days after
Lessee's receipt of Lessor's written notice setting forth the breach or
failure to perform, Lessor may terminate this lease by giving written
notice of termination to Lessee, and upon such termination, Lessor may
re-enter and take possession of the Premises to the exclusion of Lessee.
This remedy shall be in addition to all other remedies provided by law. If
the breach or failure to perform shall be the nonpayment of rent or other
sums due by the terms of this lease, then the Lessor is only required to
give Lessee ten (10) days to cure after written notice is given by Lessor,
after which time Lessor may declare this lease in default and re-enter the
Premises.
In the event Lessee is doing or permitting something to occur that is
dangerous, offensive, or prevents a neighboring business to continue with
normal operation and with the specific right of quiet enjoyment, Lessor may
gave Lessee a five (5) day notice demanding the cessation of the offensive
act or conduct. If Lessee fails to cure, remedy, or stop the activity as
defined in the demand, the Lessor may declare the lease in default and
re-enter the Premises.
12. COSTS AND ATTORNEYS FEES: If by reason of any default on the part of
either party hereto, in the performance of any of the provisions of this
lease, it becomes necessary for the other party to employ an attorney, the
said party which the court decides is in default agrees to pay all costs,
expenses and attorney fees expended or incurred by the other party in
connection therewith as may be decided by the court.
13. NON-WAIVER OF BREACH: The failure of Lessor to insist upon strict
performance on any of the covenants and agreements of this lease, or to
exercise any option herein conferred in any one or more instance, shall not
be constructed to be a waiver or relinquishment of any such, or any other
covenants or agreements, but the same shall be and remain in full force and
effect.
14. HOLDOVER: Any holding over after the expiration of said term, with the
consent of Lessor, shall be for an indefinite period of time on a
month-to-month basis, which tenancy may be terminated as provided by laws
of the State of Oregon, and during such tenancy the Lessee agrees to pay
Lessor the same rate of rental as set forth herein and agrees to be bound
by all the terms, covenants and conditions as herein specified, so far as
applicable unless said rental rate or terms are changed by Lessor with not
less than thirty (30) days prior notice in writing. Either party may
terminate this holdover month-to-month tenancy with not less than thirty
(30) days written notice.
<PAGE>
15. IMPROVEMENTS: Lessee, if not in default under this lease, shall retain
the absolute right to remove Lessee's trade fixtures and equipment from the
Premises upon termination of this agreement. Should damage be inflicted
upon the Premises during such removal (or during installation), Lessee
shall be fully responsible for repair of or payment for any and all such
damage.
Lessee shall inform Lessor as to the nature of anticipated improvements and
shall obtain Lessor's authorization before commencement of said
improvement. Lessor may require that Lessee remove (at Lessee's expense)
any non-authorized improvements installed after the commencement date of
this lease, and that Lessee restore (at Lessee's expense) the Premises to
its pre-improvement condition. Once made, Lessee may not remove
improvements, whether authorized or unauthorized, without consent of
Lessor.
16. SUCCESSORS AND ASSIGNS: The conditions, covenants and terms of this
lease shall be binding upon the respective parties and their successors and
assigns.
17. VENUE: In the event of any legal action arising out of this lease, the
venue of said action shall be in Marion County, State of Oregon.
18. CASUALTY PROVISIONS: In the event of damage by fire or other casualty
to the building in which the Premises is located, if the destruction
exceeds forty percent (40%) of the building's sound value, Lessor may elect
not to reconstruct. If Lessor elects not to reconstruct, this lease shall
terminate as of the date of the casualty. If the Lessor elects to
reconstruct, rent shall be abated to cover the entire period between the
day the casualty and the day on which the Premises is made tenantable
again.
If the building is damaged less than forty (40%) of its sound value, Lessor
shall repair the Premises with all convenient speed and Lessee shall vacate
that part of the Premises requiring repair until it is made tenantable
again. Rent shall be abated in proportion to the interference with the
occupancy of the Lessee. If the Premises occupied by Lessee is made
completely untenantable due to casualty, Lessor may elect to undertake and
complete repairs within a 90-day period from date of casualty, in which
case this lease shall remain in full force and effect. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the casualty
that Lessor elects to repair within ninety (90) days. Rent for the period
during which the Premises is untenantable shall be abated pro-rata. If
Lessor elects not to repair or cannot complete repairs within ninety (90)
days, this lease shall terminate as of the date of the casualty and any
prepayments of rent shall be refunded to Lessee pro-rata.
19. EMINENT DOMAIN: If the whole of or any substantial part of the Premises
are taken by any public authority under the power of eminent domain, or
taken in any manner for any public or quasi-public use, so as to render the
remaining portion of the Premises unsuitable for the purposes intended
hereunder, then the term of this lease shall cease as of the day possession
shall be taken by such public authority and Lessor shall make a pro-rata
refund of any pre-paid rent. All damages awarded for such taking under the
power of eminent domain or any like proceeding shall belong to and be the
property of Lessor. Lessee hereby assigns to Lessor any interest Lessee may
claim in said award.
<PAGE>
20. COMMON AREAS/PARKING: Lessee shall have full use and access to all
parking south of the southern most "T" in the main lot facing Front Street
and to all spaces adjacent to the south side of the building facing
Columbia Street. No exclusive right to use or occupy any specific parking
spaces or common area shall be granted, nor shall any overnight storage or
parking of any vehicles or equipment on the premises be permitted. If
Lessor deems it necessary, Lessor may designate assigned parking spaces
based on the square footage of building space occupied by Lessee as a
percentage of total leasable space in the building. Lessor acknowledges
that the number of parking spaces available for Lessee's use at any given
time should approximate a number based on the square footage of building
space occupied by Lessee as a percentage of the total leasable space in the
building. Lessee has the right only to occupy the interior of the specific
leased space in the building. Nothing outside of the building may be
occupied by the Lessee without express written permission of Lessor. No
exterior storage of any vehicle, equipment, or any other item is permitted.
21. SIGNS: Lessee shall erect no sign outside the building. Lessor shall
install, at Lessee's expense, a uniform type of business sign. Lessee shall
be allowed, within the sign, the use of any distinctive lettering, logo or
other business trade style. The perimeter area or frame color, size, and
dimensions shall be uniform in design as defined by Lessor.
22. WINDOW COVERINGS: Window coverings for exterior windows shall be
provided at Lessee's expense. As to design, in the interest of maintaining
uniformity, should Lessee desire to change existing window coverings,
Lessee must obtain Lessor's express written consent before removal of
existing coverings and installation of new.
23. REPAIR AND MAINTENANCE:
Lessor's Responsibilities: 1. All exterior building maintenance.
2. Landscape and common area maintenance.
3. Exterior lighting.
4. Repair and maintenance of roof, exterior
walls, and the structural components of the
building premises including utility lines to
the building.
5. Repair and maintenance of exterior doors
and glass, plumbing and electrical fixtures,
and heating or air conditioning equipment.
Tenant's responsibilities: 1. Contracting and paying for interior custodial
services, including supplying necessary
cleaning products, paper products for
restrooms, and light bulbs for all interior
lighting.
<PAGE>
24. NOTICES: Any notice required by the terms of this lease to be given by
one party to the other or desired to be given, shall be sufficient if in
writing contained in a sealed envelope and delivered personally or
deposited in the U.S. Mail. If notice is mailed, it should be sent
registered and will be considered effective forty-eight (48) hours after
mailing. Notices should be delivered to the following addresses:
Lessor: ERT West, Inc.
2001 Front St., Suite A
Salem, OR. 97303
Lessee: Casino Software Corporation of America
2001 Front St., Suite A
Salem, OR. 97303.
25. FORCE MAJEURE: Whenever either party is required hereunder to do or
complete any act, matter, or thing, the time for completion thereof shall
be extended by a period of time equal to the number of days which such
party is prevented from or is unreasonable interfered with the doing or
completion of such act, matter or thing because of strikes, lockouts,
embargoes, unavailability of labor or materials, war insurrection,
rebellion, declarations or national emergencies, acts of God, or other
causes beyond such party's reasonable control. Nothing herein contained
shall excuse the Lessee from the prompt payment of all moneys required to
be paid by the Lessee hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this instrument to be
effective the date when first written above:
LESSOR: LESSEE:
A. Wesley Worth Robert Chamberland
- ---------------------------------- -----------------------------------
Vice Pres. ERT West Inc. Senior VP (CSCA)
- ---------------------------------- -----------------------------------
Dated 1st June 1995 Dated June 1, 1995
---------------------------- -----------------------------
<PAGE>
EXHIBIT A
[DIAGRAM OF PROPERTY]
PARK 2000 ASSOCIATES
This Lease made and entered into August 21, 1995, by and between
PARK 2000 ASSOCIATES
hereinafter called "Lessor," and
CASINO SOFTWARE CORPORATION OF AMERICA, AN OREGON CORPORATION
hereinafter called "Lessee."
WITNESSETH:
DEMISED
PREMISES Lessor hereby leases, demises and lets unto Lessee, and Lessee
hereby leases, hires and takes from Lessor those certain
premises hereinafter called the "Demised Premises," located in
that certain building (the "Building"), described as follows:
THAT CERTAIN 2011 SQUARE FEET OF OFFICE SPACE LOCATED AT 2700
EAST SUNSET ROAD, LAS VEGAS, NEVADA 89120, KNOWN AS UNIT(S) #37
AS INDICATED IN RED ON EXHIBIT "A" ATTACHED.
This lease is made upon the following terms, covenants, and
conditions to which the parties hereby agree:
TERM 1. The term of this Lease shall commence on SEPTEMBER 1,
1995, and shall continue for a term of THIRTY-SIX MONTHS (36)
from and after said date of commencement. If the Demised
Premises require improvements to be constructed by the Lessor
prior to occupancy of the said premises by the Lessee, said
improvements shall be set out in "Exhibit B" attached hereto,
consisting of plans, specifications and descriptions of the work
to be performed prior to said date of occupancy, together with
the specification as to the cost of such improvements and the
party to bear such cost of improvement. If, despite Lessor's
best efforts, said premises, as improved in accordance with the
agreement of the parties, are not delivered by Lessor on or
before N/A 19 , this Lease shall have no further force or effect
and each party shall be relieved of all obligations, each to the
other, provided that said date will be extended for a period
equal to the time construction has been delayed due to causes
beyond the reasonable control of Lessor.
RENTAL 2. (a) LESSEE AGREES TO PAY A BASE MONTHLY RENTAL (plus any
excise, privilege or sales taxes or any tax levied on the
rentals or the receipt thereof, except Lessor's income tax) ON
THE FIRST DAY OF EACH CALENDAR MONTH throughout the demised term
without offset or deduction of any kind. Rental to be paid in
lawful money of the United States of America, which shall be
legal tender at the time of payment of rents, as follows:
1ST YEAR: TWENTY-SEVEN HUNDRED FIFTEEN AND 00/100 DOLLARS
($2715.00)
2ND YEAR: THIRTY-THREE HUNDRED SEVENTY-NINE AND 00/100 DOLLARS
($3379.00)
3RD YEAR: THIRTY-FIVE HUNDRED FORTY-EIGHT AND 00/100 DOLLARS
($3548.00)
(b) Lessee understands that the issuance of a check or
draft without funds or with intent to defraud is a criminal
offense punishable by imprisonment or by a fine or both fine and
imprisonment.
(c) In the event the term of this Lease commences other
than on the first day of a calendar month, or if the termination
date is not the last day of a month, a prorated monthly
installment shall be paid for the fractional month during which
this Lease commences and/or terminates. Payment of rent shall be
made by Lessee to Lessor at such addresses as shall from time to
time be designated by Lessor to Lessee in writing.
(d) If any payment of Base Monthly Rental is not received
by Lessor by the FIFTH (5th) day of the calendar month in which
it is due, then that Base Monthly Rental payment shall be
increased by five percent (5%). Accordingly, if received after
the FIFTH (5th) day of the month, Base Monthly Rental shall be:
1ST YEAR: TWENTY-EIGHT HUNDRED FIFTY AND 75/100 DOLLARS
($2850.75)
2ND YEAR: THIRTY-FIVE HUNDRED FORTY-SEVEN AND 95/100 DOLLARS
($3547.95)
3RD YEAR: THIRTY-SEVEN HUNDRED TWENTY-FIVE AND 40/100 DOLLARS
($3725.40)
Nothing in this Lease shall be construed to permit the payment
of rent after the date on which it is due. The parties hereby
agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's default with
respect to such overdue amount, nor excuse or cure any default
by Lessee under this Lease, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
(e) "Rent", "Rental", "rent" or "rental" includes the Base
Monthly Rental and other sums as may be due from Lessee pursuant
to any of the provisions of this Lease, and any other sums,
payable, or becoming payable to Lessor under this Lease.
(f) In the event a check comes back for insufficient
funds, a service fee of $25.00 will be assessed to
<PAGE>
the Tenant.
DEPOSIT 3. For and as additional consideration for the making of this
Lease, Lessee shall pay to Lessor, upon execution of this Lease,
the sum of:
THIRTY-FOUR HUNDRED FIFTY-NINE AND 00/100 DOLLARS ($3459.00)
As a security deposit to insure Lessee's faithful performance of
the terms, conditions, covenants and agreements of this Lease.
THE SECURITY DEPOSIT MAY NOT BE APPLIED AGAINST RENTAL PAYMENTS
by the Lessee. If the Lessee fully complies with all the terms,
conditions, covenants and agreements of this Lease, then within
thirty (30) days after the expiration of the Lease term, and
cleanup completed in conjunction with paragraph 33, the security
deposit without interest shall be refunded to Lessee (or, at
Lessor's option to the last permitted assignee of Lessee's
interests hereunder) less the reasonable value of damages
suffered by the Lessor, including but not limited to rental
delinquencies, costs of repairs, cleaning, lock and key change
charges and other obligations of Lessee to Lessor.
TAXES, INSURANCE
AND ASSESS-
MENTS 4. (a) As additional rental, Lessee agrees to pay to Lessor
in each year of the term of this lease a prorated amount equal
to any rate increase of liability and casualty insurance
required by the insurance company upon the building and demised
premises in addition to an amount equal to any increases in
taxes, general or special assessments, improvements or
retrofitting expenses assessed by any federal, state or
municipal authority for the real property of which the Building
and Demised Premises are a part of. The proration of the
insurance, taxes and assessments set forth above shall be based
upon the percentage of the total floor space of the Building and
Demised Premises, whether occupied or not, to the amount of
floor space being leased by Lessee. Such additional rental shall
be paid as soon as the amount thereof shall have been determined
and upon written demand thereof by Lessor to Lessee, with the
next succeeding installment of rental. Such additional rental
shall be prorated for the first and last years of the demised
terms to reflect periods during either or both of said years not
included within the demised term.
(b) Lessee agrees to pay or cause to be paid, before
delinquency, any and all taxes levied or assessed and which
become payable during the term hereof upon all equipment,
furniture, fixtures and other personal property located in the
Demised Premises, except that which may be owned by Lessor.
PURPOSE 5. Lessee agrees to use and occupy the Demised Premises during
the term of this Lease for the purpose of:
ADMINISTRATIVE OFFICES FOR GAMING SOFTWARE COMPANY
and for no other purpose whatever without the written consent of
Lessor, Lessee shall not use, or permit the Demised Premises, or
any part thereof, to be used, for any purpose or purposes other
than the purpose for which said Premises are hereby leased; and
no use shall be made of the Demised Premises, or acts done,
which will increase the rate of insurance upon the Building in
which said Premises may be located over the standard rate of
insurance prevailing in the area in which said Premises are
located, or cause a cancellation of any part thereof, or make it
impossible for Lessor to obtain an insurance policy covering the
Building or any part thereof. If the rate of any insurance
carried by Lessor is increased as a result of Lessee's use,
Lessee shall pay to Lessor the increase within ten (10) days
after Lessor delivers to Lessee a certified statement from
Lessor's insurance carrier stating that the rate of increase was
caused solely by an activity of Lessee on the Premises as
permitted in this Lease. Any other provision hereof to the
contrary notwithstanding, Lessee shall not do or permit anything
to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or
occupants of the Building or injure or annoy them or use or
allow the Premises to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Lessee cause,
maintain or permit any nuisance in, on or about the Premises.
Lessee will not commit or suffer to be committed any waste in or
upon the Premises.
ALTERATIONS AND
ADDITIONS 6. (a) LESSEE SHALL NOT, WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, MAKE ANY ALTERATIONS, ADDITIONS OR UTILITY
INSTALLATIONS, IN, ON OR ABOUT THE DEMISED PREMISES. As used in
this Paragraph 6(a), the term "utility installation" shall
include ducting, power panels, florescent fixtures, space
heaters, conduit and wiring. As a condition to giving such
consent, Lessor may require that Lessee agree to remove any such
alterations, additions, improvements or utility installations at
the expiration of the demised term and to restore the Demised
Premises to their prior condition. As a further condition to
giving such consent, Lessor may require Lessee to provide
Lessor, at Lessee's sole cost and expense, a lien and completion
bond in an amount equal to one and one-half (1-1/2) times the
estimated cost of such improvements, to insure Lessor against
any liability for mechanics' and materialmen's liens and to
insure completion of the work. (b) Unless Lessor requires their
removal, as set forth in Paragraph 6(a), all alterations,
additions, improvements and utility installments (whether or not
such utility installations constitute trade fixtures of Lessee),
which may be made on the Demised Premises, shall at the
expiration or earlier termination of the Lease become the
property of Lessor and remain upon and be surrendered
with the Demised Premises. Notwithstanding the provision of the
Paragraph 6(b), personal property, business and trade fixtures,
cabinetwork, furniture, movable partitions, machinery and
equipment, other than that which is affixed to the Demised
Premises, shall remain the property of Lessee and may be removed
by Lessee subject to the provisions of Paragraph 33, at any time
during the term of this Lease when Lessee is not in default
hereunder.
2
<PAGE>
(c) If space is equipped with air conditioning and heating
system, Lessor has designed air conditioning and heating system
for standard office occupancy only. Such systems are NOT
designed for excessive traffic, exposure to outside
temperatures, excessive equipment, excessive personnel, nor
computer room environment. Upgrading of air conditioning and
heating systems can be done at Lessee's expense.
GLASS AND
DOORS 7. Lessee shall be responsible for all doors and glass
damages by wind, vandalism, etc., on the Demised Premises, and
Lessee shall forthwith replace or repair same at Lessee's sole
expense.
ABANDON-
MENT 8. Lessee agrees not to vacate or abandon the Demised
premises at any time during the demised term. Should Lessee
vacate or abandon the Demised Premises or be dispossessed by
process of law or otherwise, such abandonment, vacation or
dispossession shall be a default hereunder. Lessee agrees that
any property not claimed within thirty (30) days after the
abandonment of the Demised Premises by the Lessee, or after the
expiration of thirty (30) days after the expiration or earlier
termination of this Lease, becomes the property of the Lessor
and shall be sold by the Lessor and the Lessor is to retain the
proceeds derived therefrom as reimbursement for costs related to
storing said property, and not as a penalty.
LESSOR'S CONVEY-
ANCE 9. IF DURING THE TERM OF THIS LEASE, LESSOR SHALL CONVEY ITS
INTEREST IN THE DEMISED PREMISES, THEN FROM AND AFTER THE
EFFECTIVE DATE OF THE CONVEYANCE, LESSOR SHALL be released and
discharged from any and all obligations under this Lease except
those already accrued.
REPAIRS 10.LESSEE, AT LESSEE'S SOLE EXPENSE, SHALL REPAIR AND
MAINTAIN THE DEMISED PREMISES and every part thereof, including
but not limited to all glazing, skylights, and signs in good,
safe and sanitary condition, except those portions which Lessor
agrees to maintain in this Paragraph 10. Lessor shall, at
Lessor's expense, repair and maintain only the heating and air
conditioning equipment and the exterior walls, exterior roof and
cement-embedded or sub surface non-accessible plumbing serving
the Demised Premises, sidewalks, driveways, landscaping and
parking lots, except that Lessee shall reimburse Lessor for any
costs incurred by Lessor in repair and maintenance of damage
caused by the intentional or negligent act of Lessee, its
officers, agents, partners, employees, tradesmen or customers.
Lessor shall not be liable to Lessee or any other party
whatsoever for any damage or injury caused by Lessor's failure
to keep or maintain said heating and air conditioning equipment,
exterior walls, exterior roof, cement-embedded or sub-surface,
non- accessible plumbing, landscaping, sidewalks, driveways and
parking lots unless Lessee has given Lessor written notice of
the need to repair said portions of the Demised Premises and
Lessor has failed to make said repairs within a reasonable time
after receiving written notice. By entry hereunder, Lessee
accepts the Demised Premises as being in good and sanitary
order, condition and repair. It is understood and agreed that
Lessor has no obligation to alter, remodel, improve, repair,
decorate or paint the Demised Premises or any part thereof,
except as specifically herein set forth, and no representations
respecting the condition of the Demised Premises have been made
by Lessor to Lessee, except as specifically herein set forth.
LAWS AND REG-
ULATIONS 11.(a) Lessee at its own cost and expense shall comply promptly
with all laws, rules, and orders of all Federal, Sate and
Municipal Governments, or departments, which may be applicable
to the Demised Premises.
(b) Lessee shall faithfully observe and comply with the
rules and regulations adopted by Lessor from time to time and
all modifications of any additions thereto from time to time put
into effect by Lessor. Lessor shall not be responsible to Lessee
for the nonperformance by any other lessee or occupant of the
Building of any of said rules and regulations.
INDEMNIFI-
CATION 12. Lessor shall not be liable to Lessee, its officers, agents,
employees, customers, invitees or third parties for any loss or
damage to property, including goods, wares and merchandise, or
for any injury or death to persons, in, on, or about the Demised
Premises. Lessee agrees to indemnify and save Lessor harmless of
and from any and all costs, expenses, claims, demands,
obligations, and liabilities, cause or causes of action by
reason of or in connection with the condition of state of repair
or use of the Building, common areas, Demised Premises or
appurtenances thereto including all adjacent sidewalks, alleys,
and parking lots.
SIGNS AND
AUCTIONS 13. Lessee shall not place or permit to be placed any
advertising, sign, marquee, awning, decoration or other
attachment on the common areas, in or on the Building or the
real property on which the Building is situated or on the roof,
front, windows, doors or exterior walls of the Demised Premises
without the prior written consent of Lessor. Lessor may without
liability, enter upon the Demised Premises or elsewhere and
remove any such advertising, sign, marquee, awning, decoration
or attachment affixed in violation of this Paragraph 13, all at
Lessee's expense. Lessee shall not conduct any auction in the
Demised Premises, the Building, or on any portion of the real
property on which the Building and Demised Premises are
situated, without Lessor's consent. ANY SIGN ON ANY BUILDING
MUST BE APPROVED BY LESSOR IN WRITING.
UTILITIES 14.(a) Lessee, from the time it first enters the Demised
Premises for the purpose of setting fixtures, or from the
commencement of the term of this Lease, whichever date shall
first occur, and throughout the term of this Lease shall pay
prior to delinquency for all water, gas, heat, light, power,
telephone service and all other utilities and services supplied
to or consumed in or on the Demised Premises, whether or not
separately metered. As additional rent, Lessee agrees to pay to
Lessor the additional sum of EIGHTY AND 00/100 DOLLARS ($80.00)
per month for water and sewer. In the event that there is an
increase in water and sewer
3
<PAGE>
rates. Lessee shall pay that portion (the determination to be
made by Lessor) of increase to Lessor within ten (10) days of
written demand therefore by Lessor to Lessee. As additional
rent, Lessee agrees to pay to Lessor an additional cost of N/A
DOLLARS ($ N/A ) per month for gas. In the event that there is
an increase in gas rates, Lessee shall pay that portion (the
determination to be made by Lessor) of increase as the floor
area of the Demised Premises bears to the total floor area of
the Building, whether occupied or not.
(b) LESSOR shall not be held responsible for any
interruption in utilities whatsoever.
ENTRY BY
LESSOR 15. Lessee shall permit Lessor and its agents to enter the
Demised Premises at all reasonable times for any of the
following purposes: To inspect the same; to show said premises
to prospective purchasers; to maintain the Building; to make
such repairs to the Demised Premises as Lessor is obligated or
elects to make; to make repairs, alterations, additions or
utility installments to any other portion of the Building; to
post notices of non-responsibility for alterations, additions,
repairs or utility installations; for the purpose of placing
upon the property in which said premises are located any
ordinary "for sale" sign. Lessee shall permit Lessor within
sixty (60) days prior to the expiration of this Lease to place
upon the Demised Premises ordinary "for lease" signs, and to
show said premises to prospective Lessees during reasonable
business hours.
PARTIAL AND TOTAL DES-
TRUCTION 16. Lessor shall carry insurance on the Demised Premises under
a standard form of fire and extended coverage policy and in the
event of partial destruction of the Demised Premises during the
term of this Lease from any cause insured under said policy,
Lessor shall forthwith repair the same, provided such repairs
can be made within ninety (90) days from date of such
destruction, under the then applicable laws and regulations of
Federal, State, County and Municipal authorities and in light of
the extent of such damage and the then condition of the labor
market and availability of materials and supplies, but such
partial destruction shall in no way annul or void this Lease,
except that Lessee shall be entitled to a proportionate
reduction of rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which the
making of such repairs shall interfere with the business carried
on by Lessee in the Demised Premises. In the Event that the
Building is destroyed to the extent of not less than fifty
percent (50%) of the replacement cost of the Building, Lessor
may elect to terminate this Lease, whether the Demised Premises
be injured or not. A total destruction of the Building shall
automatically terminate this Lease. Anything in this Paragraph
16 to the contrary, if at the time of any such damage there is
less than two (2) months terms remaining on this Lease, then
this Lease may at the option of Lessor, be cancelled by notice
in writing to Lessee within ten (10) days from the date of such
damage.
ASSIGNMENT
AND SUB-
LETTING 17. LESSEE SHALL NOT SIGN THIS LEASE OR ANY INTEREST HEREIN,
nor lease or sublet the Demised Premises, or any part thereof,
or any right or privilege appurtenant thereto, nor permit the
occupancy or use of any part thereof by any other person,
WITHOUT THE WRITTEN CONSENT OF LESSOR FIRST HAD AND OBTAINED,
and a consent to one assignment, subletting, occupancy or use,
shall not be construed as a consent to any subsequent
assignment, subletting, occupancy or use. The Lessor may refuse
its consent without giving any reason whatsoever, and such
refusal shall nevertheless be binding on Lessee.
DEFAULT
GROUNDS 18. If default shall be made in the payment of rent or any
installment thereof or in the payment of any other amount
required to be paid by Lessee under this Lease, or any other
agreement between Lessor and Lessee, or if default shall be made
in the performance of any of the other covenants, terms,
conditions, or agreements which Lessee is required to observe
and perform hereunder, or if the interest of Lessee in its
assets and/or this Lease shall be levied on or seized under
execution or other legal process, or if any petition shall be
filed or other action taken to reorganize or modify Lessee's
capital structure, or if Lessee be declared insolvent according
to law, or if any assignment of Lessee's property shall be made
for the benefit of creditors, or if a receiver or trustee is
appointed for Lessee or its property, or if Lessee shall abandon
or vacate the Demised Premises during the term of this Lease,
and thereupon at its option may, without notice or demand or any
kind to Lessee or any other person, have one or more the
remedies specified in Paragraph 19, in addition to all other
rights and remedies provided at law or in equity.
DEFAULT
REMEDIES 19.(a) Lessor may re-enter the Demised Premises with or
without process of law and take possession of the same and of
all equipment and fixtures of Lessee therein and expel or remove
Lessee and all other parties occupying the Demised Premises,
using such force as may be reasonably necessary to do so,
without being liable to any prosecution for such re-entry or for
the use of such force and without terminating this Lease, at any
time and from time to time to relet the Demised Premises or any
part thereof for the account of Lessee, for such term, upon such
conditions and at such rental as Lessor may deem proper. In such
event Lessor may receive and collect the rent from such
reletting and apply it against any amounts due from Lessee
hereunder (including without limitation such expenses as Lessor
may have incurred in recovering possession of the Demised
Premises, placing the same in good order and condition, altering
or repairing the same for reletting, and all other expenses,
commissions and charges including attorney's fees which Lessor
may have paid or incurred in connection with such repossession
and reletting). Lessor may execute any lease made pursuant
hereto in Lessor's name or in the name of Lessee as Lessor may
see fit, and Lessee thereunder shall be under no obligation to
see to the application by Lessor of any rent collected by Lessor
nor shall Lessee have any right to collect any rent thereunder.
Whether or not the Demised Premises are relet, Lessee shall pay
Lessor all amounts required to be paid by Lessee up to the date
of Lessor's re-entry and thereafter Lessee shall pay Lessor,
until the end of the term hereof, the amount of all rent and
other charges required to be paid by Lessee hereunder, less the
proceeds of such reletting during the term hereof, if any, after
payment of Lessor's
4
<PAGE>
expenses as provided above. Such payments by Lessee shall be due
at such times as are provided elsewhere in this Lease, and
Lessor need not wait until the termination of the Lease to
recover them by legal action or otherwise. Lessor shall not, by
any re-entry or other act, be deemed to have terminated this
Lease or the liability of Lessee for the total rent hereunder
unless Lessor shall give Lessee written notice of Lessor's
election to terminate this Lease.
(b) Lessor may give written notice to Lessee of Lessor's
election to terminate this Lease, re-enter the Demised Premises
with or without process of law and take possession of the same
and of all equipment and fixtures therein, and expel or remove
Lessee and all other parties occupying the premises, using such
force as may be reasonably necessary to do so, without being
liable to any prosecution for such re-entry or for the use of
such force. In such event Lessor shall thereupon be entitled to
recover from Lessee the worth, at the time of such termination,
of the excess, if any, of the rent and other charges required to
be paid by Lessee hereunder for the balance of the term hereof
(if this lease had not been so terminated) over the then
reasonable rental value of the Demised Premises for the same
period.
(c) Lessee hereby releases, indemnifies, and holds
harmless Lessor from any liability whatsoever for the removal of
persons and the removal and storage of property pursuant to
subparagraphs (a) and (b) of this Paragraph 19.
(d) To secure the full and timely performance of all of
the Lessee's obligations under this Lease, Lessee hereby grants
to Lessor a security interest and lien in all of Lessee's
equipment, goods, fixtures, furnishings, furniture, inventory,
machinery, trade fixtures, other property, and the proceeds
therefrom, now or hereafter to be located within the Demised
Premises. In the event of default or breach by Lessee, then with
respect to that security interest, Lessor may exercise all of
the rights and remedies granted a secured party under the
Uniform commercial Code as adopted to Nevada in effect at the
time.
(e) The remedies given to Lessor in this Paragraph 19
shall be in addition to and supplemental to all other rights and
remedies which Lessor may have under the laws then in force.
HOLDING
OVER 20. If Lessee holds possession of all or part of the Demised
Premises after the expiration of the term of this Lease, with or
without the express or implied consent of Lessor, Lessee shall
become a tenant from month-to-month only, upon the terms,
covenants, conditions, and agreements herein specified, so far
as applicable. Such holding over shall not constitute an
extension or renewal of this Lease. During such holding over,
the Base Monthly Rental shall be increased fifty percent (50%)
over the Base Monthly Rental provided in Paragraph 2.
WAIVER 21. No covenant, term, condition or agreement or the breach
thereof shall be deemed waived, except by written consent of the
party against whom the waiver is claimed, and any waiver or the
breach of any covenant, term, condition or agreement shall not
be deemed to be a waiver of any preceding or succeeding breach
of the same or any other covenant, term, condition or agreement.
Acceptance by Lessor of any performance by Lessee after the time
the same shall have become due shall not constitute a waiver by
Lessor of the breach or default of any covenant, term, condition
or agreement unless otherwise expressly agreed to by Lessor in
writing.
NOTICES 22. Except as otherwise provided in this Lease, all notices or
demands of any kind required or desired to be given by Lessor to
Lessee hereunder shall be in writing and shall be in writing and
shall be deemed delivered when hand-delivered or forty-eight
(48) hours after depositing the notice or demand in the United
States mail, certified or registered, postage prepaid, addressed
to the Lessee at the Demised Premises, whether or not Lessee has
departed from, abandoned or vacated the Demised Premises. All
notices or demands of any kind by Lessee to Lessor shall be in
writing and shall be deemed delivered when hand- delivered or
forty-eight (48) hours after depositing the notice or demand in
the United States mail, certified or registered, postage
prepaid, addressed to the Lessor at such address as shall from
time to time be designated by Lessor to Lessee in writing
CONDEMNA-
TION 23.In the event any condemnation proceedings shall be
commenced affecting the Demised Premises, Lessee shall have no
right to claim any valuation for its leasehold interest or
otherwise by reason of its occupancy of or improvements to said
premises, and any condemnation award (whether adjudicated or by
way of settlement) shall belong in its entirety to Lessor. In
the event of condemnation of a part of the Demised Premises, the
rent shall be reduced in the proportion that the floor area
taken bears to the total floor area prior to the taking. If
condemnation takes more than twenty-five percent (25%) of the
floor area of the Demised Premises or if the amount of Lessee's
parking area following condemnation is not sufficient to meet
the deed restrictions, if any, concerning parking on the real
property on which the Demised Premises are situated, or the
local parking ordinances, if any, only then, may Lessee, at
Lessee's option, terminate this Lease as of the date the
condemning authority takes possession of said condemned portion
by giving written notice of termination to Lessor within ten
(10) days after the condemning authority takes such possession.
If Lessee does not terminate this Lease as hereinabove
immediately provided, then the rent payable shall be reduced as
set forth above.
SUBORDIN-
ATION 24.This Lease at Lessor's option shall be subject and
subordinate to the lien of any mortgages or deeds of trust in
any amount or amounts whatsoever now or hereafter placed on or
against the real property or improvements, or either thereof, of
which the Demised Premises are a part, or on or against Lessor's
interest or estate therein, without the necessity of the
execution and delivery of any further instruments on the part of
Lessee to effectuate such subordination. If any mortgagee or
trustee shall elect to have this Lease prior to the lien of its
mortgage or deed of trust, and shall give written notice thereof
to Tenant, this Lease shall be deemed prior to such mortgage of
deed of trust, whether this Lease is dated prior or subsequent
to the
5
<PAGE>
date of said mortgage or deed of trust or the date of the
recording thereof. Lessee covenants and agrees to execute and
deliver upon demand, without charge therefore, such further
instruments evidencing such subordination of this Lease to the
line of any such mortgages or deeds of trust as may be required
by Lessor. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact, irrevocably, to execute and deliver any such
agreements, instruments, releases or other documents.
PARKING AND
COMMON
AREA 25.(a) Lessee and its customers, employees and tradesmen may
park only operative vehicles on the surfaced parking lot
adjacent to the Demised Premises only during Lessee's normal
business hours on terms and conditions as may be established by
Lessor from time to time during the term of this Lease. The
parking areas referred to in the Paragraph 25 shall be used on a
non-exclusive basis with other occupants of the Building. THE
PARKING LOT MAY NOT BE USED TO STORE VEHICLES OR TO WORK ON
VEHICLES. NO VEHICLE SHALL BE PARKED IN A PARKING LOT FOR MORE
THAN TWENTY-FOUR (24) CONSECUTIVE HOURS. Any vehicles parked in
the parking lots in breach of these terms may be towed away at
Lessee's expense. Lessee releases, indemnifies, and holds
harmless Lessor and Lessor's officers, employees and agents from
any claims from or relating to such towing of vehicles including
any consequential damages or loss of property of loss of the use
of the vehicle or other property. The right to tow a vehicle in
addition to Lessor's rights under the Lease for default or
breach of any of the terms hereof. (b) Other than parking,
egress and ingress, Lessee has no right to use the common areas,
and Lessee shall not obstruct the common areas, including the
sidewalks, landscaped areas, paved areas, parking lots, or
driveways. ANIMALS INCLUDING WATCHDOGS, ARE NOT ALLOWED ON THE
DEMISED PREMISES OR COMMON AREAS.
SUCCESSORS 26. All the terms, covenants and conditions hereof shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the parties hereto,
provided that nothing in this paragraph shall be deemed to
permit any assignment, sub-letting, occupancy or use contrary to
the provisions of Paragraph 17.
ENTIRE
AGREEMENT 27. This lease, along with any exhibits and attachments hereto,
constitutes the entire agreement between Lessor and Lessee
relative to the Demised Premises and this Lease and the exhibits
and attachments may be altered, amended or revoked only by an
instrument in writing signed by both Lessor and Lessee. Lessor
and Lessee hereby agree that all oral agreements between and
among themselves and their agents or representatives relative to
the leasing of the Demised Premises are merged in or revoked by
this Lease.
DEFAULT BY
LESSOR 28. Lessor shall not be in default under this Lease unless Lessor
fails to perform obligations required of Lessor within a
reasonable time, but in no event later than thirty (30) days
after written notice by Lessee to Lessor, specifying wherein
Lessor has failed to perform such obligation; provided, however,
that if the nature of Lessor's obligation is such that more than
thirty (30) days are required for performance, then Lessor shall
not be in default if Lessor commences performances within such
thirty (30) day period and thereafter diligently prosecutes the
same to completion.
LIABILITY
INSURANCE 29. Lessee shall, at Lessee's sole cost and expense, obtain
and keep in force during the term of this Lease a policy of
comprehensive public liability insurance insuring Lessor, Lessee
and Lessor's mortgage against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto. Such insurance shall be in the amount
of not less than $1,000,000.00 for injury or death of one person
in any one accident or occurrence and in the amount of not less
than $1,000,000.00 for injury or death of more than one person
in any one accident or occurrence. Such insurance shall further
insure Lessor and Lessee against liability for property damage
of at least $500,000.00. The limit of any such insurance shall
not, however, limit the liability of the Lessee hereunder,
Lessee may provide this insurance under a blanket policy,
provided that said insurance shall have a Lessor's protective
liability endorsement attached thereto. If Lessee shall fail to
procure and maintain said insurance, Lessor may, but shall not
be required to, procure and maintain same, but at the expense of
Lessee. Insurance required hereunder shall be in companies
approved by Lessor which approval shall not be unreasonably
withheld. Lessee shall deliver to Lessor, upon request, copies
of policies of liability insurance required herein or
certificates evidencing the existence and amounts of such
insurance with loss payable clauses satisfactory to Lessor. No
policy shall be cancelable or subject to reduction of coverage
without thirty (30) days prior written notice to Lessor. All
such policies not contributing with and not in excess of
coverage which Lessor may carry.
ESTOPPEL CERT-
IFICATE 30. Lessee shall at any time upon not less than ten (10) days
prior written notice from Lessor execute, acknowledge and
deliver to Lessor a statement in writing (i) certifying that
this Lease is unmodified in full force and effect (or, if
modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect)
and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to
Lessee's knowledge, any uncured defaults on the part of Lessor
hereunder, or specifying such defaults if any are claimed. Any
such statement may be conclusively relied upon by a prospective
purchaser or encumbrancer of the Demised Premises. Lessee's
failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that this Lease is in full force and
effect, without modification except as may be represented by
Lessor, (ii) that there are not uncured defaults in Lessor's
performance, and (iii) that not more than one (1) month's rent
has been paid in advance. If Lessor
6
<PAGE>
desires to finance or refinance the Demised Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender
designated by lessor such financial statements of Lessee as may
be reasonably required by such lender. Such statements shall
include the past three (3) years financial statements of Lessee.
All such financial statements shall be received by Lessor in
confidence and shall be used only for the purposes herein set
forth.
COST OF
SUIT 31.(a) If Lessee or Lessor shall bring any action for any
relief against the other, declaratory or otherwise, arising out
of this Lease, including any suit by Lessor for the recovery of
rent or possession of the Demised Premises, the losing party
shall pay the successful party a reasonable sum for attorney's
fees which shall be deemed to have accrued on the commencement
of such action and shall be paid whether or not such action is
prosecuted to judgment.
(b) Should Lessor, without fault on Lessor's part, be made
a party to any litigation instituted by Lessee or by a third
party against Lessee, or by or against any person holding under
or using the Demised Premises by license of Lessee, or for the
foreclosure of any lien for labor or material furnished to or
for Lessee or any such other person or otherwise arising out of
or resulting from any act or transaction of Lessee or of any
such other person, Lessee covenants to save and hold Lessor
harmless from any judgment rendered against Lessor or the
Demised Premises or any part thereof, and all costs and
expenses, including reasonable attorney's fees, incurred by
Lessor in or in connection with such litigation.
CHOICE OF
LAW 32. This Lease shall be governed, construed and enforced by
the laws of the state of Nevada.
SURRENDER 33. Upon the expiration or earlier termination of this Lease,
Lessee shall remove all its signs from the Demised Premises,
return the keys and surrender the Demised Premises in a
condition satisfactory to Lessor. Lessee, at its sole cost and
expense, agrees to repair any damage to the Demised Premises
caused by or in connection with the removal of any articles of
personal property, business or trade fixtures, machinery,
equipment, cabinetwork, furniture, movable partition's, or
permanent improvements or additions, including without
limitation thereto, repairing the floor and patching and
painting the walls where required by Lessor to Lessor's
reasonable satisfaction. Lessee shall indemnify Lessor against
any loss or liability resulting from delay by Lessee in so
surrendering the Demised premises, including without limitation,
any claims made by any succeeding tenant founded on such delay.
MISCELL-
ANEOUS 34. The marginal captions of this Lease are for convenience only
and shall not in any way limit or be deemed to constitute or
interpret the terms and provisions hereof. The words "Lessor"
and "Lessee" as used herein shall include the plural as well as
the singular. Words used in neuter gender include the masculine
and feminine, words in the masculine or feminine gender include
the neuter. If there be more than one Lessor or Lessee, the
obligations hereunder imposed upon Lessor lessee shall be joint
and several.
TIME 35. Time is of the essence of this Lease and each and all of
its provisions.
PARKING
LIMITS 36.(a) Lessor shall have the right to limit the amount of
vehicles parked on the demised premises in connection with
Lessee's business during the term of this Lease.
(b) No storage, repairs, or cleaning of vehicles, parts,
or equipment outside the units will be permitted.
PROMOTIONAL
MATERIAL 37. Lessee shall not use pictures of Lessor's properties for, but
not limited to, brochures, advertising, or promotional
activities without written consent of Lessor.
ALARM
SYSTEM 38. No alarm systems shall be attached to the exterior walls of
the Building. When installing a system, the alarm box must be
inside the unit. Lessee shall, at Lessee's sole expense, be
responsible for removal of alarm system and restoring the
Demised Premises to its original condition.
USE OF
DUMPSTERS 39. "IN THE AREAS WHERE DUMPSTERS ARE PROVIDED, LESSEE MAY
UTILIZE THE DUMPSTERS FOR WASTEPAPER TRASH ONLY." Packing skids,
boxes and garbage from the complex or home are not to be placed
in or around dumpsters. It is the sole responsibility of Lessee
to dispose of excessive trash and packaging materials somewhere
else or obtain their own dumpster. "IN AREAS WHERE DUMPSTERS ARE
NOT PROVIDED, IT IS LESSEE'S SOLE RESPONSIBILITY TO DISPOSE OF
THEIR TRASH OR PROVIDE THEIR OWN DUMPSTER." Trash stored outside
Building, not in dumpster, is prohibited and Lessor shall have
the right to charge a fine to Lessee for committing said storage
or waste on the premises.
______ 40. Lessee agrees not to park vehicles in front of other
units whether vacant or occupied.
______ 41. Lessee agrees not to wash or work on vehicles outside
demised premises.
______ 42. Lessee is with understanding that he is allotted one (1)
parking space per 1,000 square feet of
7
<PAGE>
warehouse space, and one (1) parking space per 300 square feet
of office space.
______ 43. Lessee shall be held responsible for verifying zip code of
said unit address.
TOXIC
WASTE 44. Lessee guarantees that, to the best of his knowledge,
neither he nor any of his employees, agents or visitors to the
premises shall use, store or dispose of any hazardous or toxic
materials or chemicals within the subject premises or any other
area within the Project that premises is a part of. Any such use
or storage of any hazardous or toxic materials or chemicals
within the subject premises or other parts of the Project shall
constitute a material breach of this lease, and Lessor shall be
entitled to implement all means necessary to recover from this
breach (as outlined within the Lease). In addition, Lessee shall
have the sole financial and legal responsibility for the proper
and legal clean-up of any spillage or other contamination caused
by any use of toxic or hazardous material within Lessee's leased
premises or the Project in general. It is further agreed, that
if upon written notice from Lessor that Lessee has violated the
above provisions of this Agreement, Lessee does not complete
necessary steps (as outlined in said written notice from
Lessor), to achieve satisfactory clean-up within 72 hours,
Lessor shall have the right to complete the necessary clean-up
and bill entire cost (including any legal costs incurred by
Lessor) of same to Lessee. Lessee shall also bear the entire
cost of any government clean-up order or any third-party
lawsuit. Hazardous or toxic material means any substance now, or
hereafter, identified by any government agency as requiring
special handling, disposal or control unlike regular refuse.
VERBAL DIS-
CLAIMER 45. All agreements and concessions between LESSOR and LESSEE
for the demised Premise, are included as Addenda or attached
letters (no verbal agreements). Any modifications, remodels, or
maintenance of leased unit(s), required after Lessor and Lessee
have signed this Lease, that are not specifically described in
this Lease, Addenda, attached letters, and walk-thru will be at
no cost to the Lessor. Prior to vacating unit(s), Lessee agrees
to restore unit(s) to the condition in which is was received,
except for normal wear and tear, at Lessee's expense, unless
changes to the unit are approved in writing by Lessor.
Discrepancies identified during the initial walk-thru inspection
not repaired by Lessor will be included in the Lease file and
Lessee will not be charged for such repairs.
KEY AUTHOR-
IZATION 46. The Ribeiro Corporation makes every effort to protect your
property. One of the areas that we have found to be very
important is the authorization of lock changes and the release
of keys that open your unit. In order to protect you, please
list in the space provided, the names of the people authorized
to order lock changes and keys.
=====================================================================
NAME SOCIAL SECURITY HOME TELEPHONE #
---- --------------- ----------------
ROBERT CHAMBERLAND ###-##-#### 503-315-8713
JESS LUGAN ###-##-#### 702-829-1936
=====================================================================
AIRPORT PROX-
IMITY 47. LESSEE is aware that PARK 2000 ASSOCIATES have signed an
aviation easement with the McCarran International Airport
Authority. LESSEE also understands that because of the proximity
of the leased premises to McCarran International Airport, that
noise levels may be experienced by reason of the operation of
the airport within FAA parameters and the LESSEE agrees to hold
the Airport Authority, Clark County, Park 2000 Associates, and
The Ribeiro Corporation harmless from any claim or litigation
stemming from normal or reasonable operations of the airport
that fall within FAA parameters of conduct of operations.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease, or as the
case may be, have caused their officers thereunto duly authorized to
execute this Lease in duplicate, the day and year first above written.
- --------------------------------------------
PARK 2000 ASSOCIATES
LESSOR
/s/
- --------------------------------------------
Leasing Division
THE RIBEIRO CORPORATION
THE CASINO SOFTWARE CORPORATION OF AMERICA,
AN OREGON CORPORATION
- --------------------------------------------
LESSEE
BY: JESS LUGAN
- --------------------------------------------
JESS LUGAN
AS: VICE PRESIDENT OF SALES & MARKETING
- --------------------------------------------
DATE: 8/23/25
- --------------------------------------------
PERSONALLY GUARANTEED
BY:
- --------------------------------------------
DATE:
- --------------------------------------------
BY:
- --------------------------------------------
AS:
- --------------------------------------------
DATE:
- --------------------------------------------
PERSONALLY GUARANTEED
BY:
- --------------------------------------------
DATE:
- --------------------------------------------
9
<PAGE>
AGENCY DISCLOSURE AGREEMENT
LESSOR'S AGENT
A Leasing agent under a listing/management agreement with a Lessor acts as
the agent of the Lessor only. A subagent, or "cooperating agent" is one who
has agreed to work for the Lessor's Agent, usually through an Open Listing.
A subagent may work in a different real estate office. A Lessor's Agent or
subagent has, without limitation, the following affirmative obligations: To
the Lessor:
(A) A fiduciary duty of utmost care, integrity, and loyalty in
dealing with the Lessor. To the Lessee and Lessor:
(A) Diligent exercise of reasonable skill and care in the performance
of the agent's duties.
(B) A duty of honesty and fair dealing and good faith.
(C) A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to,
or within the diligent attention and observation of, the parties.
An agent is not obligated to reveal to either party any confidential
information obtained from the other party unless that information involves
the above affirmative duties.
The above duties of the agent transaction do not relieve a Lessor or a
Lessee from the responsibility to protect their own interests. You should
carefully read all agreements to ensure that they adequately express your
understanding of the transaction. A real estate agent is a person qualified
to advise about real estate only. If legal or tax advise is desired, you
should consult a competent professional in that field.
THE DISCLOSURE
KIMMEN OLSEN is the agent of THE RIBEIRO CORPORATION, ONLY.
KIMMEN OLSEN 8/23/95
- ---------------------------------- -----------------------------------
KIMMEN OLSEN DATE
THE CONFIRMATION
I/we acknowledge receipt of a copy of this disclosure and confirm my/our
understanding of the disclosed agency relationship.
KIMMEN OLSEN 8/23/95 AM\PM
- ---------------------------------- -----------------------------------
PARK 2000 ASSOCIATES DATE TIME
ROBERT CHAMBERLAND, VP 8/23/95 2:30 PM
- ---------------------------------- -----------------------------------
CASINO SOFTWARE CORPORATION OF DATE TIME
AMERICA, AN OREGON CORPORATION
10
<PAGE>
2300 E SUNSET
[Diagram of Property]
<PAGE>
APPROVED SIGN #7
IN ACCORDANCE WITH PARAGRAPH 13 OF LEASE
NO SUBSTITUTIONS
[Diagram of Approved Sign]
1. MAXIMUM 3" LETTERS
2. GOLD LEAF LETTERING ONLY
3. ALL SIGNS SUBJECT TO LESSOR'S APPROVAL
JESS LUGAN
------------------------------
TENANT SIGNATURE
8/25/95
------------------------------
DATE
<PAGE>
[DIAGRAM OF APPROVED SIGN]
Sign face and posts should be painted color
match at complex, Oxford brown or equal, with
gold lettering and preferably, black or blue
outline. Characters can be imitation gold
leaf or vinyl die cut, based upon customer
preference.
Ribeiro Corporation - SIGN TYPE 10
Post and Panel
<PAGE>
[DIAGRAM OF APPROVED SIGN]
Typestyle: Optima Regular or Bold Please see attached
Color: Architectural bronze sheet for more
Finish: Anodized information.
Materials: Aluminum cast
12" capitals and 5" lower case or all 10 1/2" caps.
Subheadings not smaller than 6". (Depending upon location of
signage, measurements of facade should be taken to assure
proper margins are available.)
<PAGE>
PARK 2000 ASSOCIATES
ADDENDUM FOR LEASE EXTENSION
This Addendum affects the Lease dated SEPTEMBER 1, 1995 entered into
between PARK 2000 ASSOCIATES, hereinafter known as "LESSOR", and CASINO
SOFTWARE CORPORATION, AN OREGON CORPORATION, hereinafter known as "LESSEE".
It is mutually agreed that LESSOR and LESSEE shall extend said Lease
pertaining to that approximately 2011 square feet of office space located
at 2700 E SUNSET RD, LAS VEGAS, NEVADA 89120, known as UNIT(S) #37 for
purpose of ADMINISTRATIVE OFFICE FOR GAMING SOFTWARE COMPANY. This
extension shall commence on SEPTEMBER 1, 1998 and shall continue for a term
of TWELVE (12) MONTHS at the rates listed below:
1ST 12 MOS: THIRTY-SEVEN HUNDRED TWENTY-FIVE AND 00/100 DOLLARS ($3725.00)
Rental payments are due on the lst day of each calendar month. If any
payment of Base Monthly Rental is not received by LESSOR by the FIFTH (5TH)
day of the calendar month in which it is due, then the Base Monthly Rental
payment shall be increased by FIVE PERCENT (5%). Accordingly, if received
after the FIFTH (5th) day of the month, Base Monthly Rental shall be:
1ST 12 MOS: THIRTY-NINE HUNDRED ELEVEN AND 25/100 DOLLARS ($3911.25)
As additional rent, Lessee agrees to pay to Lessor the additional sum of
EIGHTY DOLLARS ($80.00) per month for water and sewer. A Security Deposit
in the amount of THIRTY-FOUR HUNDRED FIFTY-NINE AND 00/100 DOLLARS
($3459.00) is required by LESSOR. LESSEE has previously paid THIRTY-FOUR
HUNDRED FIFTY-NINE AND 00/100 DOLLARS ($3459.00). Therefore, a deposit
increase in the amount of ZERO ($0.00) is required to be paid to LESSOR
upon execution of this Addendum. This Addendum shall be subject to all
terms, covenants and conditions of the Lease, except as modified
hereinabove and by the following:
AIRPORT
PROXIMITY LESSEE is aware that PARK 2000 ASSOCIATES has signed an
aviation easement with the McCarran International Airport
Authority. LESSEE also understands that because of the
proximity of the leased premises to McCarran
International Airport, that noise levels may be
experienced by reason of the operation of the airport
within FAA parameters and the LESSEE agrees to hold the
Airport Authority, Clark County, Park 2000 Associates,
and The Ribeiro Corporation harmless from any claim or
litigation stemming from normal or reasonable operations
of the airport that fall within FAA parameters of conduct
of operations.
TOXIC AND/
OR HAZARDOUS MATERIALS
Lessee guarantees that neither he nor any of his
employees, agents or visitors to this premises shall use,
store or dispose of any hazardous or toxic materials or
chemicals within the subject premises or any other area
within the Project that premises is a part of. Any such
use or storage of any hazardous or toxic materials or
chemicals within the subject premises or other parts of
the Project shall constitute a material breach of this
lease, and Lessor shall be entitled to implement all
means necessary to recover from this breach (as outlined
within the Lease). In addition, Lessee shall have sole
financial and legal responsibility for the proper and
legal clean-up of any spillage or other contamination
caused by any use of toxic or hazardous material within
Lessee's leased premises or the Project in general. It is
further agreed, that if upon written notice from Lessor
that Lessee has violated the above provisions of this
Agreement, Lessee does not complete necessary steps (as
outlined in said written notice from Lessor), to achieve
satisfactory clean-up within 72 hours, Lessor shall have
the right to complete the necessary clean-up and bill
entire cost (including any legal costs incurred by
Lessor) of same to Lessee. Lessee shall also bear the
entire cost of any government, clean-up order or any
third-party lawsuit. Hazardous or toxic material means
any substance now, or hereafter, identified by any
government agency as requiring special handling, disposal
or control unlike regular refuse.
DISCLAIMER
All agreements and concessions are contained within this
Lease, Addenda or attached letters (no verbal
agreements). Any modifications, remodels, or maintenance
of leased unit(s), required after Lessor and Lessee have
signed this Lease, that are not specifically described in
this Lease, Addenda, attached letters, and walk-thru will
be at no cost to the lessor. Prior to vacating unit(s),
Lessee agrees to restore unit(s) to the condition in
which it was received, except for normal wear and tear,
at Lessee's expense, unless changes to the unit are
approved in writing by Lessor. Discrepancies identified
during the initial walk-thru inspection not repaired by
Lessor will be included in the Lease file and Lessee will
not be charged for such repairs.
<PAGE>
KEY AUTHORIZATION
THE RIBEIRO CORPORATION MAKES EVERY EFFORT TO PROTECT
YOUR PROPERTY. ONE OF THE AREAS THAT WE HAVE FOUND TO BE
VERY IMPORTANT IS THE AUTHORIZATION OF LOCK CHANGES AND
THE RELEASE OF KEYS THAT OPEN YOUR UNIT.
IN ORDER TO PROTECT YOU, PLEASE LIST IN THE SPACE
PROVIDED, THE NAMES OF THE PEOPLE AUTHORIZED TO ORDER
LOCK CHANGES AND KEYS.
THE RIBEIRO CORPORATION
PROPERTY MANAGEMENT DEPARTMENT
2690 CHANDLER #1
LAS VEGAS, NV 89120
================================================================================
NAME SOCIAL SECURITY HOME TELEPHONE #
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
RULES AND REGULATIONS
It is further agreed that the following rules and regulations shall be and
are hereby made a part of this Lease, and the Lessee agrees that its
employees and agents, or any others permitted by the Lessee to occupy or
enter said Premises, will at all times abide by said rules and regulations
and that a default in the performance and observance thereof shall operate
the same as any other defaults herein:
1. The sidewalks, entries, and driveways shall not be obstructed by the
Lessee, or its agents, or used by them for any purpose other than
ingress and egress to and from their Premises. Lessor may remove any
such obstruction or thing including ashtrays, a-frame signs,
trailers, etc. (unauthorized by Lessor) without notice or obligation
to Lessee and at the Lessee's sole cost.
2. Lessee shall not place any movable objects, including, antennas,
trash cans, outdoor furniture, etc., in the parking areas, landscaped
area or other areas outside of said Premises, or on the roof of said
Premises.
3. Lessee shall not use, keep or permit to be used or to be kept any
foul or noxious gas or substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or
objectionable to Lessor or other occupants of the Building by reason
of noise, odors and/or vibrations, or interfere in any way with other
Lessees or those having business therein. Lessee shall maintain the
leased Premises free from mice, bugs, and ants at Lessee's expense.
4. Lessor reserves the right to exclude or expel from the complex any
person who in the judgment of the Lessor, is intoxicated or under the
influence of liquor or drugs or who shall in any manner do any act in
violation of the Rules and Regulations of the said project.
5. No outside storage of pallets, boxes, cartons drums or any other
containers or materials used in shipping or transport of goods is
allowed. Lessee shall place all refuse in proper receptacles provided
by Lessee at Lessee's expense on the Premises or inside enclosures
(if any) provided by Lessor for the Building, and shall keep
sidewalks and driveways outside the Building and lobbies, corridor
stairwells, ducts or shafts of the Building free of all refuse.
6. No person shall go on the roof without Lessor's permission.
7. All goods, including material used to store goods, delivered to the
Premises or Lessee shall be immediately moved into the Premises and
shall not be left in parking or receiving areas overnight.
8. Lessee shall not install or operate any steam or gas engine or boiler
in the Building. The use of oil, gas or inflammable liquids for
heating, lighting or any other purpose is expressly prohibited.
Explosives or other articles deemed hazardous shall not be brought
into the Building. Lessees shall not use any other method of heating
than that supplied by Lessor.
9. The water closets, urinals, waste lines, vents or flues of the
Building shall not be used for any purpose other than those for which
they were constructed, and no rubbish, acids, vapors, newspapers or
other such substances of any kind shall be thrown into them. The
expense caused by any breakage, stoppage, or damage resulting from a
violation of this rule by any Lessee, its employees, visitors, guests
or licensees, shall be paid by Lessee.
10. The Premises shall not be used or permitted to be used for
residential, lodging or sleeping purposes.
11. Except as permitted by Lessor, Lessee shall not mark upon, paint
signs upon, cut, drill into, drive nails or screws into, or in any
way deface the walls, ceilings, partitions or floors of their
Premises or of the Building, and the repair cost of any defacement,
damage, or injury caused by Lessee, its agent or employees shall be
paid by the Lessee.
12. The cost of repairing any damage to the public partitions of the
Building or the public facilities, or to any facilities used in
common
2
<PAGE>
with other Lessees, caused by any Lessee or the employees, licensees,
agents or invitees of the Lessee, shall be paid by such Lessee.
13. Lessor reserves the right to restrict or prohibit canvassing,
soliciting or peddling in the Building.
14. The Lessor reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to
time be needful and desirable and for the safety, care and
cleanliness of the Premises and for the preservation of good order
therein.
CASINO SOFTWARE CORPORATION,
PARK 2000 ASSOCIATES AN OREGON CORPORATION
- ---------------------------------- -----------------------------------
LESSOR LESSEE
KIMMEN OLSEN ROLAND THOMAS
- ---------------------------------- -----------------------------------
LEASING DIVISION ROLAND THOMAS, C.E.O.
THE RIBEIRO CORPORATION
4/25/96 4/25/96
- ---------------------------------- -----------------------------------
DATE DATE
PERSONAL GUARANTEE
- ---------------------------------- -----------------------------------
3
<PAGE>
AGENCY DISCLOSURE AGREEMENT
LESSOR'S AGENT
A Leasing agent under a listing/management agreement with a Lessor acts as
the agent of the Lessor only. A subagent, or "cooperating agent" is one who
has agreed to work for the Lessor's Agent, usually through an Open Listing.
A subagent may work in a different real estate office. A Lessor's Agent or
subagent has, without limitation, the following affirmative obligations:
To the Lessor:
(A) A fiduciary duty of utmost care, integrity, and loyalty in
dealing with the Lessor. To the Lessee and Lessor:
(A) Diligent exercise of reasonable skill and care in the performance
of the agent's duties.
(B) A duty of honesty and fair dealing and good faith.
(C) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are
not known to, or within the diligent attention and observation
of, the parties.
An agent is not obligated to reveal to either party any confidential
information obtained from the other party unless that information involves
the above affirmative duties.
The above duties of the agent in this transaction do not relieve a Lessor
or a Lessee from the responsibility to protect their own interests. You
should carefully read all agreements to ensure that they adequately express
your understanding of the transaction. A real estate agent is a person
qualified to advise about real estate the real estate ONLY. If legal or tax
advise is desired, you should consult a competent professional in that
field.
THE DISCLOSURE
KIMMEN OLSEN is the agent of THE RIBEIRO CORPORATION, ONLY.
KIMMEN OLSEN 4/25/96
- ---------------------------------- -----------------------------------
KIMMEN OLSEN DATE
THE CONFIRMATION
I/we acknowledge receipt of a copy of this disclosure and confirm my/our
understanding of the disclosed agency relationship.
KIMMEN OLSEN 4/25/96 AM\PM
- ---------------------------------- -----------------------------------
PARK 2000 ASSOCIATES DATE TIME
AM\PM
- ---------------------------------- -----------------------------------
CASINO SOFTWARE CORPORATION, DATE TIME
AN OREGON CORPORATION
4
PARK 2000 ASSOCIATES
This lease made and entered into April 16, 1996, by and between
PARK 2000 ASSOCIATES
hereinafter called "Lessor," and
CASINO SOFTWARE CORPORATION, AN OREGON CORPORATION
hereinafter called "Lessee."
WITNESSETH:
DEMISED
PREMISES Lessor hereby leases, demises and lets unto Lessee, and Lessee
hereby leases, hires and takes from Lessor those certain
premises hereinafter called the "Demised Premises," located in
that certain building (the "Building"), described as follows:
THAT APPROXIMATELY 1063 SQUARE FEET OF OFFICE SPACE LOCATED AT
2700 E SUNSET RD, LAS VEGAS, NEVADA 89120, KNOWN AS UNIT(S) #38
& 39 AS INDICATED IN RED ON EXHIBIT "A" ATTACHED.
This lease is made upon the following terms, covenants, and
conditions to which the parties hereby agree:
TERM 1. The term of this Lease shall commence on MAY 1, 1996, and
shall continue for a term of FORTY (40) MONTHS from and after
said date of commencement. If the Demised Premises require
improvements to be constructed by the Lessor prior to occupancy
of the said premises by the Lessee, said improvements shall be
set out in "Exhibit B" attached hereto, consisting of plans,
specifications and descriptions of the work to be performed
prior to said date of occupancy, together with the
specification as to the cost of such improvements and the party
to bear such cost of improvement. If, despite Lessor's best
efforts, said premises, as improved in accordance with the
agreement of the parties, are not delivered by Lessor on or
before N/A, this Lease shall have no further force or effect
and each party shall be relieved of all obligations, each to
the other, provided that said date will be extended for a
period equal to the time construction has been delayed due to
causes beyond the reasonable control of Lessor.
RENTAL 2. (a) LESSEE AGREES TO PAY A BASE MONTHLY RENTAL (plus any
excise, privilege or sales taxes or any tax levied on the
rentals or the receipt thereof, except Lessor's income tax) ON
THE FIRST DAY OF EACH CALENDAR MONTH throughout demised term
without offset or deduction of any kind. Rental to be paid in
lawful money of the United States of America, which shall be
legal tender at the time of payment of rents, as follows:
1ST 16 MOS: SEVENTEEN HUNDRED ONE AND 00/100 DOLLARS ($1701.00)
2ND 12 MOS: SEVENTEEN HUNDRED EIGHTY-SEVEN AND 00/100 DOLLARS
($1787.00)
3RD 12 MOS: EIGHTEEN HUNDRED SEVENTY-SEVEN AND 00/100 DOLLARS
($1877.00)
(b) Lessee understands that the issuance of a check or
draft without funds or with intent to defraud is a criminal
offense punishable by imprisonment or by a fine or both fine
and imprisonment.
(c) In the event the term of this Lease commences other
than on the first day of a calendar month, or if the
termination date is not the last day of a month, a prorated
monthly installment shall be paid for the fractional month
during which this Lease commences and/or terminates. Payment of
rent shall be made by Lessee to Lessor at such addresses as
shall from time to time be designated by Lessor to Lessee in
writing.
(d) If any payment of Base Monthly Rental is not received
by Lessor by the FIFTH (5th) day of the calendar month in which
it is due, then that Base Monthly Rental payment shall be
increased by five percent (5%). Accordingly, if received after
the FIFTH (5th) day of the month, Base Monthly Rental shall be:
1ST 16 MOS: SEVENTEEN HUNDRED EIGHTY-SIX AND 05/100 DOLLARS
($1786.05)
2ND 12 MOS: EIGHTEEN HUNDRED SEVENTY-SIX AND 35/100 DOLLARS
($1876.35)
3RD 12 MOS: NINETEEN HUNDRED SEVENTY AND 85/100 DOLLARS ($1970.85)
Nothing in this Lease shall be construed to permit the payment
of rent after the date on which it is due. The parties hereby
agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's default with
respect to such overdue amount, nor excuse or cure any default
by Lessee under this Lease, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
(e) "Rent", "Rental", "rent" or "rental" includes the
Base Monthly Rental and other sums as may be due from Lessee
pursuant to any of the provisions of this Lease, and any other
sums, payable, or becoming payable to Lessor under this Lease.
(f) In the event a check comes back for insufficient
funds, a service fee of $25.00 will be assessed to the Lessee.
DEPOSIT 3. For and as additional consideration for the making of this
Lease, Lessee shall pay to Lessor, upon execution of this
Lease, the sum of:
<PAGE>
SEVENTEEN HUNDRED FORTY-ONE AND 00/100 DOLLARS ($1741.00)
As a security deposit to insure Lessee's faithful performance
of the terms, conditions, covenants and agreements of this
Lease. THE SECURITY DEPOSIT MAY NOT BE APPLIED AGAINST RENTAL
PAYMENTS by the Lessee. If the Lessee fully complies with all
the terms, conditions, covenants and agreements of this Lease,
then within thirty (30) days after the expiration of the Lease
term, and cleanup completed in conjunction with paragraph 33,
the security deposit without interest shall be refunded to
Lessee (or, at Lessor's option to the last permitted assignee
of Lessee's interests hereunder) less the reasonable value of
damages suffered by the Lessor, including but not limited to
rental delinquencies, costs of repairs, cleaning, lock and key
change charges and other obligations of Lessee to Lessor.
TAXES, INSURANCE
AND ASSESS-
MENTS 4. (a) As additional rental, Lessee agrees to pay to Lessor
in each year of the term of this lease a prorated amount to any
rate increase of liability and casualty insurance required by
the insurance company upon the building and demised premises in
addition to an amount equal to any increases in taxes, general
or special assessments, improvements or retrofitting expenses
assessed by any federal, state or municipal authority for the
real property of which the Building and Demised Premises are a
part of. The proration of the insurance, taxes and assessments
set forth above shall be based upon the percentage of the total
floor space of the Building and Demised Premises, whether
occupied or not, to the amount of floor space being leased by
Lessee. Such additional rental shall be paid as soon as the
amount thereof shall have been determined and upon written
demand thereof by Lessor to Lessee, with the next succeeding
installment of rental. Such additional rental shall be prorated
for the first and last years of the demised terms to reflect
periods during either or both of said years not included within
the demised term. (b) Lessee agrees to pay or cause to be paid,
before delinquency, any and all taxes levied or assessed and
which become payable during the term hereof upon all equipment,
furniture, fixtures and other personal property located in
Demised Premises, except that which may be owned by Lessor.
PURPOSE 5. Lessee agrees to use and occupy the Demised Premises during
the term of this Lease for the purpose of:
ADMINISTRATIVE OFFICES FOR GAMING SOFTWARE COMPANY
and for no other purpose whatever without the written consent
of Lessor, Lessee shall not use, or permit the Demised
Premises, or any part thereof, to be used, for any purpose or
purposes other than the purpose for which said Premises are
hereby leased; and no use shall be made of the Demised
Premises, or acts done, which will increase the rate of
insurance upon the Building in which said Premises may be
located over the standard rate of insurance prevailing in the
area in which said Premises are located, or cause a
cancellation of any part thereof, or make it impossible for
Lessor to obtain an insurance policy covering the Building or
any part thereof. If the rate of any insurance carried by
Lessor is increased as a result of Lessee's use, Lessee shall
pay to Lessor the increase within ten (10) days after Lessor
delivers to Lessee a certified statement from Lessor's
insurance carrier stating that the rate of increase was caused
solely by an activity of Lessee on the Premises as permitted in
this Lease. Any other provision hereof to the contrary
notwithstanding, Lessee shall not do or permit anything to be
done in or about the Premises which will in any way obstruct or
interfere with the rights of other Lessees or occupants of the
Building or injure or annoy them or use or allow the Premises
to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Lessee cause, maintain or permit any
nuisance in, on or about the Premises. Lessee will not commit
or suffer to be committed any waste in or upon the Premises.
ALTERATIONS AND
ADDITIONS 6. (a) LESSEE SHALL NOT, WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, MAKE ANY ALTERATIONS, ADDITIONS OR UTILITY
INSTALLATIONS, IN, ON OR ABOUT THE DEMISED PREMISES. As used in
this Paragraph 6(a), the term "utility installation" shall
include ducting, power panels, florescent fixtures, space
heaters, conduit and wiring. As a condition to giving such
consent, Lessor may require that Lessee agree to remove any
such alterations, additions, improvements or utility
installations at the expiration of the demised term and to
restore the Demised Premises to their prior condition. As a
further condition to giving such consent, Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, a
lien and completion bond in an amount equal to one and one-half
(1-1/2) times the estimated cost of such improvements, to
insure Lessor against any liability for mechanics' and
materialmen's liens and to insure completion of the work.
(b) Unless Lessor requires their removal, as set forth in
Paragraph 6(a), all alterations, additions, improvements and
utility installments (whether or not such utility installations
constitute trade fixtures of Lessee), which may be made on the
Demised Premises, shall at the expiration or earlier
termination of the Lease become the property of Lessor and
remain upon and be surrendered with the Demised Premises.
Notwithstanding the provision of the Paragraph 6(b), personal
property, business and trade fixtures, cabinetwork, furniture,
movable partitions, machinery and equipment, other than that
which is affixed to the Demised Premises, shall remain the
property of Lessee and may be removed by Lessee subject to the
provisions of Paragraph 33, at any time during the term of this
Lease when Lessee is not in default hereunder.
(c) If space is equipped with air conditioning and
heating system, Lessor has designed air conditioning and
heating system for standard office occupancy only. Such systems
are NOT designed for excessive traffic, exposure to outside
temperatures, excessive equipment, excessive personnel, nor
computer room environment. Upgrading of air conditioning and
heating systems can be done at Lessee's expense.
GLASS AND
DOORS 7. Lessee shall be responsible for all doors and glass damages
by wind, vandalism, etc., on the Demised Premises, and Lessee
shall forthwith replace or repair same at Lessee's sole
expense.
2
<PAGE>
ABANDON-
MENT 8. Lessee agrees not to vacate or abandon the Demised premises
at any time during the demised term. Should Lessee vacate or
abandon the Demised Premises or be dispossessed by process of
law or otherwise, such abandonment, vacation or dispossession
shall be a default hereunder. Lessee agrees that any property
not claimed within thirty (30) days after the abandonment of
the Demised Premises by the Lessee, or after the expiration of
thirty (30) days after the expiration or earlier termination of
this Lease, becomes the property of the Lessor and shall be
sold by the Lessor and the Lessor is to retain the proceeds
derived therefrom as reimbursement for costs related to storing
said property, and not as a penalty.
LESSOR'S CONVEY-
ANCE 9. IF DURING THE TERM OF THIS LEASE, LESSOR SHALL CONVEY ITS
INTEREST IN THE DEMISED PREMISES, THEN FROM AND AFTER THE
EFFECTIVE DATE OF THE CONVEYANCE, LESSOR SHALL be released and
discharged from any and all obligations under this Lease except
those already accrued.
REPAIRS 10. LESSEE, AT LESSEE'S SOLE EXPENSE, SHALL REPAIR AND
MAINTAIN THE DEMISED PREMISES and every part thereof, including
but not limited to all glazing, skylights, and signs in good,
safe and sanitary condition, except those portions which Lessor
agrees to maintain in this Paragraph 10. Lessor shall, at
Lessor's expense, repair and maintain only the heating and air
conditioning equipment and the exterior walls, exterior roof
and cement-embedded or sub surface non-accessible plumbing
serving the Demised Premises, sidewalks, driveways, landscaping
and parking lots, except that Lessee shall reimburse Lessor for
any costs incurred by Lessor in repair and maintenance of
damage caused by the intentional or negligent act of Lessee,
its officers, agents, partners, employees, tradesmen or
customers. Lessor shall not be liable to Lessee or any other
party whatsoever for any damage or injury caused by Lessor's
failure to keep or maintain said heating and air conditioning
equipment, exterior walls, exterior roof, cement-embedded or
sub-surface, non-accessible plumbing, landscaping, sidewalks,
driveways and parking lots unless Lessee has given Lessor
written notice of the need to repair said portions of the
Demised Premises and Lessor has failed to make said repairs
within a reasonable time after receiving written notice. By
entry hereunder, Lessee accepts the Demised Premises as being
in good and sanitary order, condition and repair. It is
understood and agreed that Lessor has no obligation to alter,
remodel, improve, repair, decorate or paint the Demised
Premises or any part thereof, except as specifically herein set
forth, and no representations respecting the condition of the
Demised Premises have been made by Lessor to Lessee, except as
specifically herein set forth.
LAWS AND REG-
ULATIONS 11.(a) Lessee at its own cost and expense shall comply promptly
with all laws, rules, and orders of all Federal, Sate and
Municipal Governments, or departments, which may be applicable
to the Demised Premises.
(b) Lessee shall faithfully observe and comply with the
rules and regulations adopted by Lessor from time to time and
all modifications of any additions thereto from time to time
put into effect by Lessor. Lessor shall not be responsible to
Lessee for the nonperformance by any other lessee or occupant
of the Building of any of said rules and regulations.
INDEMNIFI-
CATION 12. Lessor shall not be liable to Lessee, its officers, agents,
employees, customers, invitees or third parties for any loss or
damage to property, including goods, wares and merchandise, or
for any injury or death to persons, in, on, or about the
Demised Premises. Lessee agrees to indemnify and save Lessor
harmless of and from any and all costs, expenses, claims,
demands, obligations, and liabilities, cause or causes of
action by reason of or in connection with the condition of
state of repair or use of the Building, common areas, Demised
Premises or appurtenances thereto including all adjacent
sidewalks, alleys, and parking lots.
SIGNS AND
AUCTIONS 13. Lessee shall not place or permit to be placed any
advertising, sign, marquee, awning, decoration or other
attachment on the common areas, in or on the Building or the
real property on which the Building is situated or on the roof,
front, windows, doors or exterior walls of the Demised Premises
without the prior written consent of Lessor. Lessor may without
liability, enter upon the Demised Premises or elsewhere and
remove any such advertising, sign, marquee, awning, decoration
or attachment affixed in violation of this Paragraph 13, all at
Lessee's expense. Lessee shall not conduct any auction in the
Demised Premises, the Building, or on any portion of the real
property on which the Building and Demised Premises are
situated, without Lessor's consent. ANY SIGN ON ANY BUILDING
MUST BE APPROVED BY LESSOR IN WRITING.
UTILITIES 14.(a) Lessee, from the time it first enters the Demised
Premises for the purpose of setting fixtures, or from the
commencement of the term of this Lease, whichever date shall
first occur, and throughout the term of this Lease shall pay
prior to delinquency for all water, gas, heat, light, power,
telephone service and all other utilities and services supplied
to or consumed in or on the Demised Premises, whether or not
separately metered. As additional rent, Lessee agrees to pay to
Lessor the additional sum of FORTY DOLLARS ($40.00) per month
for water and sewer. In the event that there is an increase in
water and sewer rates, Lessee shall pay that portion (the
determination to be made by Lessor) of increase to Lessor
within ten (10) days of written demand therefore by Lessor to
Lessee. As additional rent, Lessee agrees to pay to Lessor an
additional cost of N/A DOLLARS ($ N/A ) per month for gas. In
the event that there is an increase in gas rates, Lessee shall
pay that portion (the determination to be made by Lessor) of
increase as the floor area of the Demised Premises bears to the
total floor area of the Building, whether occupied or not.
(b) LESSOR shall not be held responsible for any
interruption in utilities whatsoever.
ENTRY BY
LESSOR 15. Lessee shall permit Lessor and its agents to enter the
Demised Premises at all reasonable times for any of the
following purposes: To inspect the same; to show said premises
to prospective purchasers; to maintain the Building; to make
such repairs
3
<PAGE>
to the Demised Premises as Lessor is obligated or elects to
make; to make repairs, alterations, additions, or utility
installations to any other portion of the Building; to post
notices of non-responsibility for alterations, additions,
repairs or utility installations; for the purpose of placing
upon the property in which said premises are located any
ordinary "for sale" sign. Lessee shall permit Lessor within
sixty (60) days prior to the expiration of this Lease to place
upon the Demised Premises ordinary "for lease" signs, and to
show said premises to prospective Lessees during reasonable
business hours.
PARTIAL AND TOTAL DES-
TRUCTION 16. Lessor shall carry insurance on the Demised Premises
under a standard form of fire and extended coverage policy and
in the event of partial destruction of the Demised Premises
during the term of this Lease from any cause insured under said
policy, Lessor shall forthwith repair the same, provided such
repairs can be made within ninety (90) days from date of such
destruction, under the then applicable laws and regulations of
Federal, State, County and Municipal authorities and in light
of the extent of such damage and the then condition of the
labor market and availability of materials and supplies, but
such partial destruction shall in no way annul or void this
Lease, except that Lessee shall be entitled to a proportionate
reduction of rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which
the making of such repairs shall interfere with the business
carried on by Lessee in the Demised Premises. In the Event that
the Building is destroyed to the extent of not less than fifty
percent (50%) of the replacement cost of the Building, Lessor
may elect to terminate this Lease, whether the Demised Premises
be injured or not. A total destruction of the Building shall
automatically terminate this Lease. Anything in this Paragraph
16 to the contrary, if at the time of any such damage there is
less than two (2) months terms remaining on this Lease, then
this Lease may at the option of Lessor, be cancelled by notice
in writing to Lessee within ten (10) days from the date of such
damage.
ASSIGNMENT
AND SUB-
LETTING 17. LESSEE SHALL NOT ASSIGN THIS LEASE OR ANY INTEREST HEREIN,
nor lease or sublet the Demised Premises, or any part thereof,
or any right or privilege appurLessee thereto, nor permit the
occupancy or use of any part thereof by any other person,
WITHOUT THE WRITTEN CONSENT OF LESSOR FIRST HAD AND OBTAINED,
and a consent to one assignment, subletting, occupancy or use,
shall not be construed as a consent to any subsequent
assignment, subletting, occupancy or use. The Lessor may refuse
its consent without giving any reason whatsoever, and such
refusal shall nevertheless be binding on Lessee.
DEFAULT
GROUNDS 18. If default shall be made in the payment of rent or any
installment thereof or in the payment of any other amount
required to be paid by Lessee under this Lease, or any other
agreement between Lessor and Lessee, or if default shall be
made in the performance of any of the other covenants, terms,
conditions, or agreements which Lessee is required to observe
and perform hereunder, or if the interest of Lessee in its
assets and/or this Lease shall be levied on or seized under
execution or other legal process, or if any petition shall be
filed or other action taken to reorganize or modify Lessee's
capital structure, or if Lessee be declared insolvent according
to law, or if any assignment of Lessee's property shall be made
for the benefit of creditors, or if a receiver or trustee is
appointed for Lessee or its property, or if Lessee shall
abandon or vacate the Demised Premises during the term of this
Lease, and thereupon at its option may, without notice or
demand or any kind to Lessee or any other person, have any one
or more the remedies specified in Paragraph 19, in addition to
all other rights and remedies provided at law or in equity.
DEFAULT
REMEDIES 19. (a) Lessor may re-enter the Demised Premises with or
without process of law and take possession of the same and of
all equipment and fixtures of Lessee therein and expel or
remove Lessee and all other parties occupying the Demised
Premises, using such force as may be reasonably necessary to do
so, without being liable to any prosecution for such re-entry
or for the use of such force and without terminating this
Lease, at any time and from time to time to relet the Demised
Premises or any part thereof for the account of Lessee, for
such term, upon such conditions and at such rental as Lessor
may deem proper. In such event Lessor may receive and collect
the rent from such reletting and apply it against any amounts
due from Lessee hereunder (including without limitation such
expenses as Lessor may have incurred in recovering possession
of the Demised Premises, placing the same in good order and
condition, altering or repairing the same for reletting, and
all other expenses, commissions and charges including
attorney's fees which Lessor may have paid or incurred in
connection with such repossession and reletting). Lessor may
execute any lease made pursuant hereto in Lessor's name or in
the name of Lessee as Lessor may see fit, and Lessee thereunder
shall be under no obligation to see to the application by Lessor
of any rent collected by Lessor nor shall Lessee have any right to
collect any rent thereunder. Whether or not the Demised
Premises are relet, Lessee shall pay Lessor all amounts
required to be paid by Lessee up to the date of Lessor's
re-entry and thereafter Lessee shall pay Lessor, until the end
of the term hereof, the amount of all rent and other charges
required to be paid by Lessee hereunder, less the proceeds of
such reletting during the term hereof, if any, after payment of
Lessor's expenses as provided above. Such payments by Lessee
shall be due at such times as are provided elsewhere in this
Lease, and Lessor need not wait until the termination of the
Lease to recover them by legal action or otherwise. Lessor
shall not, by any re-entry or other act, be deemed to have
terminated this Lease or the liability of Lessee for the total
rent hereunder unless Lessor shall give Lessee written notice
of Lessor's election to terminate this Lease.
(b) Lessor may give written notice to Lessee of Lessor's
election to terminate this Lease, re-enter the Demised Premises
with or without process of law and take possession of the same
and of all equipment and fixtures therein, and expel or remove
Lessee and all other parties occupying the premises, using such
force as may be reasonably necessary to do so, without being
liable to any prosecution for such re-entry or for the use of
such force. In such event Lessor shall thereupon be entitled to
recover from Lessee the worth, at the time of such termination,
of the excess, if any, of the rent and other charges required
to be paid by Lessee hereunder for the balance of the term
hereof (if this lease had not been so terminated) over the then
reasonable rental value of the Demised Premises for the same
period.
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(c) Lessee hereby releases, indemnifies, and holds
harmless Lessor from any liability whatsoever for the removal
of persons and the removal and storage of property pursuant to
subparagraphs (a) and (b) of this Paragraph 19.
(d) To secure the full and timely performance of all of
the Lessee's obligations under this Lease, Lessee hereby grants
to Lessor a security interest and lien in all of Lessee's
equipment, goods, fixtures, furnishings, furniture, inventory,
machinery, trade fixtures, other property, and the proceeds
therefrom, now or hereafter to be located within the Demised
Premises. In the event of default or breach by Lessee, then
with respect to that security interest, Lessor may exercise all
of the rights and remedies granted a secured party under the
Uniform commercial Code as adopted to Nevada in effect at the
time.
(e) The remedies given to Lessor in this Paragraph 19
shall be in addition to and supplemental to all other rights
and remedies which Lessor may have under the laws then in
force.
HOLDING
OVER 20. If Lessee holds possession of all or a part of the Demised
Premises after the expiration of the term of this Lease, with
or without the express or implied consent of Lessor, Lessee
shall become a Lessee from month-to-month only, upon the terms,
covenants, conditions, and agreements herein specified, so far
as applicable. Such holding over shall not constitute an
extension or renewal of this Lease. During such holding over,
the Base Monthly Rental shall be increased fifty percent (50%)
over the Base Monthly Rental provided in Paragraph 2.
WAIVER 21. No covenant, term, condition or agreement or the breach
thereof shall be deemed waived, except by written consent of
the party against whom the waiver is claimed, and any waiver or
the breach of any covenant, term, condition or agreement shall
not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other covenant, term, condition or
agreement. Acceptance by Lessor of any performance by Lessee
after the time the same shall have become due shall not
constitute a waiver by Lessor of the breach or default of any
covenant, term, condition or agreement unless otherwise
expressly agreed to by Lessor in writing.
NOTICES 22. Except as otherwise provided in this Lease, all notices
or demands of any kind required or desired to be given by
Lessor to Lessee hereunder shall be in writing and shall be
deemed delivered when hand- delivered or forty-eight (48) hours
after depositing the notice or demand in the United States
mail, certified or registered, postage prepaid, addressed to
the Lessee at the Demised Premises, whether or not Lessee has
departed from, abandoned or vacated the Demised Premises. All
notices or demands of any kind by Lessee to Lessor shall be in
writing and shall be deemed delivered when hand delivered or
forty-eight (48) hours after depositing the notice or demand in
the United States mail, certified or registered, postage
prepaid, addressed to the Lessor at such address as shall from
time to time be designated by Lessor to Lessee in writing.
CONDEMNA-
TION 23. In the event any condemnation proceedings shall be
commenced affecting the Demised Premises, Lessee shall have no
right to claim any valuation for its leasehold interest or
otherwise by reason of its occupancy of or improvements to said
premises, and any condemnation award (whether adjudicated or by
way of settlement) shall belong in its entirety to Lessor. In
the event of condemnation of a part of the Demised Premises,
the rent shall be reduced in the proportion that the floor area
taken bears to the total floor area prior to the taking. If
condemnation takes more than twenty-five percent (25%) of the
floor area of the Demised Premises or if the amount of Lessee's
parking area following condemnation is not sufficient to meet
the deed restrictions, if any, concerning parking on the real
property on which the Demised Premises are situated, or the
local parking ordinances, if any, only then, may Lessee, at
Lessee's option, terminate this Lease as of the date the
condemning authority takes possession of said condemned portion
by giving written notice of termination to Lessor within ten
(10) days after the condemning authority takes such possession.
If Lessee does not terminate this Lease as hereinabove
immediately provided, then the rent payable shall be reduced as
set forth above.
SUBORDIN-
ATION 24. This Lease at Lessor's option shall be subject and
subordinate to the lien of any mortgages or deeds of trust in
any amount or amounts whatsoever now or hereafter placed on or
against the real property or improvements, or either thereof of
which the Demised Premises are a part, or on or against
Lessor's interest or estate therein, without the necessity of
the execution and delivery of any further instruments on the
part of Lessee to effectuate such subordination. If any
mortgagee or trustee shall elect to have this Lease prior to
the lien of its mortgage or deed of trust, and shall give
written notice thereof to Lessee, this Lease shall be deemed
prior to such mortgage or deed of trust, whether this Lease is
dated prior or subsequent to the date of said mortgage or deed
of trust or the date of the recording thereof. Lessee covenants
and agrees to execute and deliver upon demand, without charge
therefore, such further instruments evidencing such
subordination of this Lease to the line of any such mortgages
or deeds of trust as may be required by Lessor. Lessee hereby
appoints Lessor as Lessee's attorney-in-fact, irrevocably, to
execute and deliver any such agreements, instruments, releases
or other documents.
PARKING AND
COMMON
AREA 25. (a) Lessee and its customers, employees and tradesmen may
park only operative vehicles on the surfaced parking lot
adjacent to the Demised Premises only during Lessee's normal
business hours on terms and conditions as may be established by
Lessor from time to time during the term of this Lease. The
parking areas referred to in the Paragraph 25 shall be used on
a non-exclusive basis with other occupants of the Building. THE
PARKING LOT MAY NOT BE USED TO STORE VEHICLE OR TO WORK ON
VEHICLES. NO VEHICLE SHALL BE PARKED IN A PARKING LOT FOR MORE
THAN TWENTY-FOUR (24) CONSECUTIVE HOURS. Any vehicles parked in
the parking lots in breach of these terms may be towed away at
Lessee's expense. Lessee releases, indemnifies, and holds
harmless Lessor and Lessor's officers, employees and agents
from any claims arising from or relating to such towing of
vehicles including any consequential damages or loss of
property of loss of the use of the vehicle or other property.
The right to tow a vehicle in addition to Lessor's rights under
the Lease for default or breach of any of the terms hereof.
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(b) Other than parking, egress and ingress, Lessee has no
right to use the common areas, and Lessee shall not obstruct
the common areas, including the sidewalks, landscaped areas,
paved areas, parking lots, or driveways. ANIMALS INCLUDING
WATCHDOGS, ARE NOT ALLOWED ON THE DEMISED PREMISES OR COMMON
AREAS.
SUCCESSORS 26. All the terms, covenants and conditions hereof shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the parties hereto,
provided that nothing in this paragraph shall be deemed to
permit any assignment, sub-letting, occupancy or use contrary
to the provisions of Paragraph 17.
ENTIRE
AGREEMENT 27. This lease, along with any exhibits and attachments hereto,
constitutes the entire agreement between Lessor and relative to
the Demised Premises and this Lease and the exhibits and
attachments may be altered, amended or revoked only by an
instrument in writing signed by both Lessor and Lessee. Lessor
and Lessee hereby agree that all oral agreements between and
among themselves and their agents or representatives relative
to the leasing of the Demised Premises are merged in or revoked
by this Lease.
DEFAULT BY
LESSOR 28. Lessor shall not be in default under this Lease unless
Lessor fails to perform obligations required of Lessor within a
reasonable time, but in no event later than thirty (30) days
after written notice by Lessee to Lessor, specifying wherein
Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that
more than thirty (30) days are required for performance, then
Lessor shall not be in default if Lessor commences performance
within such thirty (30) day period and thereafter diligently
prosecutes the same to completion.
LIABILITY
INSURANCE 29.Lessee shall, at Lessee's sole cost and expense, obtain
and keep in force during the term of this Lease a policy of
comprehensive public liability insurance insuring Lessor,
Lessee and Lessor's mortgage against any liability arising out
of the ownership, use, occupancy or maintenance of the Premises
and all areas appurLessee thereto. Such insurance shall be in
the amount of not less than $1,000,000.00 for injury or death
of one person in any one accident or occurrence and in the
amount of not less than $1,000,000.00 for injury or death of
more than one person in any one accident or occurrence. Such
insurance shall further insure Lessor and Lessee against
liability for property damage of at least $500,000.00. The
limit of any such insurance shall not, however, limit the
liability of the Lessee hereunder, Lessee may provide this
insurance under a blanket policy, provided that said insurance
shall have a Lessor's protective liability endorsement attached
thereto. If Lessee shall fail to procure and maintain said
insurance, Lessor may, but shall not be required to, procure
and maintain same, but at the expense of Lessee. Insurance
required hereunder shall be in companies approved by Lessor
which approval shall not be unreasonably withheld. Lessee shall
deliver to Lessor, upon request, copies of policies of
liability insurance required herein or certificates evidencing
the existence and amounts of such insurance with loss payable
clauses satisfactory to Lessor. No policy shall be cancelable
or subject to reduction of coverage without thirty (30) days
prior written notice to Lessor. All such policies not
contributing with and not in excess of coverage which Lessor
may carry.
ESTOPPEL CERT-
IFICATE 30. Lessee shall at any time upon not less than ten (10)
days prior written notice from Lessor execute, acknowledge and
deliver to Lessor a statement in writing (i) certifying that
this Lease is unmodified in full force and effect (or, if
modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges
are paid in advance, if any, and (ii) acknowledging that there
are not, to Lessee's knowledge, any uncured defaults on the
part of Lessor hereunder, or specifying such defaults if any
are claimed. Any such statement may be conclusively relied upon
by a prospective purchaser or encumbrancer of the Demised
Premises. Lessee's failure to deliver such statement within
such time shall be conclusive upon Lessee (i) that this Lease
is in full force and effect without modification except as may
be represented by Lessor, (ii) that there are not uncured
defaults in Lessor's performance, and (iii) that not more than
one (1) month's rent has been paid in advance. If Lessor
desires to finance or refinance the Demised Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender
designated by lessor such financial statements of Lessee as may
be reasonably required by such lender. Such statements shall
include the past three (3) years financial statements of
Lessee. All such financial statements shall be received by
Lessor in confidence and shall be used only for the purposes
herein set forth.
COSTS OF
SUIT 31. (a) If Lessee or Lessor shall bring any action for any
relief against the other, declaratory or otherwise, arising out
of this Lease, including any suit by Lessor for the recovery of
rent or possession of the Demised Premises, the losing party
shall pay the successful party a reasonable sum for attorney's
fees which shall be deemed to have accrued on the commencement
of such action and shall be paid whether or not such action is
prosecuted to judgment.
(b) Should Lessor, without fault on Lessor's part, be
made a party to any litigation instituted by Lessee or by a
third party against Lessee, or by or against any person holding
under or using the Demised Premises by license of Lessee, or
for the foreclosure of any lien for labor or material furnished
to or for Lessee or any such other person or otherwise arising
out of or resulting from any act or transaction of Lessee or of
any such other person, Lessee covenants to save and hold Lessor
harmless from any judgment rendered against Lessor or the
Demised Premises or any part thereof, and all costs and
expenses, including reasonable attorney's fees, incurred by
Lessor in or in connection with such litigation.
CHOICE OF
LAW 32. This Lease shall be governed, construed and enforced by
the laws of the state of Nevada.
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SURRENDER 33. Upon the expiration or earlier termination of this Lease,
Lessee shall remove all its signs from the Demised Premises,
return the keys and surrender the Demised Premises in a
condition satisfactory to Lessor. Lessee, at its sole cost and
expense, agrees to repair any damage to the Demised Premises
caused by or in connection with the removal of any articles of
personal property, business or trade fixtures, machinery,
equipment, cabinetwork, furniture, movable partition's, or
permanent improvements or additions, including without
limitation thereto, repairing the floor and patching and
painting the walls where required by Lessor to Lessor's
reasonable satisfaction. Lessee shall indemnify Lessor against
any loss or liability resulting from delay by Lessee in so
surrendering the Demised premises, including without
limitation, any claims made by any succeeding Lessee founded on
such delay.
MISCEL-
LANEOUS 34. The marginal captions of this Lease are for convenience only
and shall not in any way limit or be deemed to construe or
interpret the terms and provisions hereof. The words "Lessor"
and "Lessee" as used herein shall include the plural as well as
the singular. Words used in neuter gender include the masculine
and feminine, words in the masculine or feminine gender include
the neuter. If there be more than one Lessor or Lessee, the
obligations hereunder imposed upon Lessor lessee shall be joint
and several.
TIME 35. Time is of the essence of this Lease and each and all of
its provisions.
PARKING
LIMITS 36.(a) Lessor shall have the right to limit the amount of
vehicles parked on the demised premises in connection with
Lessee's business during the term of this Lease.
(b) No storage, repairs, or cleaning of vehicles, parts,
or equipment outside the units will be permitted.
PROMOTIONAL
MATERIAL 37. Lessee shall not use pictures of Lessor's properties for,
but not limited to, brochures, advertising, or promotional
activities without written consent of Lessor.
ALARM
SYSTEMS 38. No alarm systems shall be attached to the exterior walls of
the Building. When installing a system, the alarm box must be
inside the unit. Lessee shall, at Lessee's sole expense, be
responsible for removal of alarm system and restoring the
Demised Premises to its original condition.
USE OF
DUMPSTERS 39. "IN THE AREAS WHERE DUMPSTERS ARE PROVIDED, LESSEE MAY
UTILIZE THE DUMPSTERS FOR WASTEPAPER TRASH ONLY." Packing
skids, boxes and garbage from the complex or home are not to be
placed in or around dumpsters. It is the sole responsibility of
Lessee to dispose of excessive trash and packaging materials
somewhere else or obtain their own dumpster. "IN AREAS WHERE
DUMPSTERS ARE NOT PROVIDED, IT IS LESSEE'S SOLE RESPONSIBILITY
TO DISPOSE OF THEIR TRASH OR PROVIDE THEIR OWN DUMPSTER." Trash
stored outside Building, not in dumpster, is prohibited and
Lessor shall have the right to charge a fine to Lessee for
committing said storage or waste on the premises.
_____ 40. Lessee agrees not to park vehicles in front of other units
whether vacant or occupied.
_____ 41. Lessee agrees not to wash or work on vehicles outside
demised premises.
_____ 42. Lessee is with understanding that he is allotted one
(1) parking space per 1,000 square feet of warehouse space, and
one (1) parking space per 300 square feet of office space.
_____ 43. Lessee shall be held responsible for verifying zip code
of said unit address.
TOXIC
WASTE 44. Lessee guarantees that, to the best of his knowledge,
neither he nor any of his employees, agents or visitors to the
premises shall use, store or dispose of any hazardous or toxic
materials or chemicals within the subject premises or any other
area within the Project that premises is a part of. Any such
use or storage of any hazardous or toxic materials or chemicals
within the subject premises or other parts of the Project shall
constitute a material breach of this lease, and Lessor shall be
entitled to implement all means necessary to recover from this
breach (as outlined within the Lease). In addition, Lessee
shall have sole financial and legal responsibility for the
proper and legal clean-up of any spillage or other
contamination caused by any use of toxic or hazardous material
within Lessee's leased premises or the Project in general. It
is further agreed, that if upon written notice from Lessor that
Lessee has violated the above provisions of this Agreement,
Lessee does not complete necessary steps (as outlined in said
written notice from Lessor), to achieve satisfactory clean-up
within 72 hours, Lessor shall have the right to complete the
necessary clean-up and bill entire cost (including any legal
costs incurred by Lessor) of same to Lessee. Lessee shall also
bear the entire cost of any government clean-up order or any
third-party lawsuit. Hazardous or toxic material means any
substance now, or hereafter, identified by any government
agency as requiring special handling, disposal or control
unlike regular refuse.
VERBAL DIS-
CLAIMER 45. All agreements and concessions between LESSOR and LESSEE
for the demised Premise, are contained within this Lease,
Addenda or attached letters (no verbal agreements). Any
modifications, remodels, or maintenance of leased unit(s),
required after Lessor and Lessee have signed this Lease, that
are not specifically described in this Lease, Addenda, attached
letters, and walk-thru will be at no cost to the Lessor. Prior
to vacating unit(s), Lessee agrees to restore unit(s) to the
condition in which is was received, except for normal wear and
tear, at Lessee's expense, unless changes to the unit are
approved in writing by Lessor. Discrepancies identified during
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the initial walk-thru inspection not repaired by Lessor will be
included in the Lease file and Lessee will not be charged for
such repairs.
KEY AUTHOR-
IZATION 46. The Ribeiro Corporation makes every effort to protect your
property. One of the areas that we have found to be very
important is the authorization of lock changes and the release
of keys that open your unit. In order to protect you, please
list in the space provided, the names of the people authorized
to order lock changes and keys.
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NAME SOCIAL SECURITY HOME TELEPHONE #
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AIRPORT
PROXIMITY 47. LESSEE is aware that PARK 2000 ASSOCIATES have signed an
aviation easement with the McCarran International Airport
Authority. LESSEE also understands that because of the
proximity of the leased premises to McCarran International
Airport, that noise levels may be experienced by reason of the
operation of the airport within FAA parameters and the LESSEE
agrees to hold the Airport Authority, Clark County, the Dept of
Aviation, and The Ribeiro Corporation harmless from any claim
or litigation stemming from normal or reasonable operations of
the airport that fall within FAA parameters of conduct of
operations.
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RULES AND REGULATIONS
It is further agreed that the following rules and regulations shall be and
are hereby made a part of this Lease, and the Lessee agrees that its
employees and agents, or any others permitted by the Lessee to occupy or
enter said Premises, will at all times abide by said rules and regulations
and that a default in the performance and observance thereof shall operate
the same as any other defaults herein:
1. The sidewalks, entries, and driveways shall not be obstructed by the
Lessee, or its agents, or used by them for any purpose other than
ingress and egress to and from their Premises. Lessor may remove any
such obstruction or thing including ashtrays, a-frame signs, trailers,
etc. (unauthorized by Lessor) without notice or obligation to Lessee
and at the Lessee's sole cost.
2. Lessee shall not place any movable objects, including, antennas, trash
cans, outdoor furniture, etc., in the parking areas, landscaped area
or other areas outside of said Premises, or on the roof of said
Premises.
3. Lessee shall not use, keep or permit to be used or to be kept any foul
or noxious gas or substance in the Premises, or permit or suffer the
Premises to be occupied or used in a manner offensive or objectionable
to Lessor or other occupants of the Building by reason of noise, odors
and/or vibrations, or interfere in any way with other Lessees or those
having business therein. Lessee shall maintain the leased Premises
free from mice, bugs, and ants at Lessee's expense.
4. Lessor reserves the right to exclude or expel from the complex any
person who in the judgment of the Lessor, is intoxicated or under the
influence of liquor or drugs or who shall in any manner do any act in
violation of the Rules and Regulations of the said project.
5. No outside storage of pallets, boxes, cartons, drums or any other
containers or materials used in shipping or transport of goods is
allowed. Lessee shall place all refuse in proper receptacles provided
by Lessee at Lessee's expense on the Premises or inside enclosures (if
any) provided by Lessor for the Building, and shall keep sidewalks and
driveways outside the Building and lobbies, corridor stairwells, ducts
or shafts of the Building free of all refuse.
6. No person shall go on the roof without Lessor's permission.
7. All goods, including material used to store goods, delivered to the
Premises or Lessee shall be immediately moved into the Premises and
shall not be left in parking or receiving areas overnight.
8. Lessee shall not install or operate any steam or gas engine or boiler
in the Building. The use of oil, gas or inflammable liquids for
heating, lighting or any other purpose is expressly prohibited.
Explosives or other articles deemed hazardous shall not be brought
into the Building. Lessees shall not use any other method of heating
than that supplied by Lessor.
9. The water closets, urinals, waste lines, vents or flues of the
Building shall not be used for any purpose other than those for which
they were constructed, and no rubbish, acids, vapors, newspapers or
other such substances of any kind shall be thrown into them. The
expense caused by any breakage, stoppage, or damage resulting from a
violation of this rule by any Lessee, its employees, visitors, guests
or licensees, shall be paid by Lessee.
10. The Premises shall not be used or permitted to be used for
residential, lodging or sleeping purposes.
11. Except as permitted by Lessor, Lessee shall not mark upon, paint
signs upon, cut, drill into, drive nails or screws into, or in any
way deface the walls, ceilings, partitions or floors of their
Premises or of the Building, and the repair cost of any defacement,
damage, or injury caused by Lessee, its agent or employees shall be
paid by the Lessee.
12. The cost of repairing any damage to the public partitions of the
Building or the public facilities, or to any facilities used in
common with other lessees caused by any Lessee or the employees,
licensees, agents or invitees of the Lessee, shall be paid by such
Lessee.
13. Lessor reserves the right to restrict or prohibit canvassing, soliciting
or peddling in the Building.
14. The Lessor reserves the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be
needful and desirable and for the safety, care and cleanliness of the
Premises and for the preservation of good order therein.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease, or as the
case may be, have caused their officers thereunto duly authorized to
execute this Lease in duplicate, the day and year first above written.
PARK 2000 ASSOCIATES
- ----------------------------------
LESSOR
/s/
- ----------------------------------
Leasing Division
THE RIBEIRO CORPORATION
CASINO SOFTWARE CORPORATION,
AN OREGON CORPORATION
- ----------------------------------
LESSEE
BY: ROLAND THOMAS
- ----------------------------------
ROLAND THOMAS
AS: PRESIDENT
- ----------------------------------
C.E.O.
DATE: 4/25/96
- ----------------------------------
PERSONALLY GUARANTEED
BY:
- ----------------------------------
DATE:
- ----------------------------------
BY:
- ----------------------------------
AS:
- ----------------------------------
DATE:
- ----------------------------------
PERSONALLY GUARANTEED
BY:
- ----------------------------------
DATE:
- ----------------------------------
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AGENCY DISCLOSURE AGREEMENT
LESSOR'S AGENT
A Leasing agent under a listing/management agreement with a Lessor acts as
the agent of the Lessor only. A subagent, or "cooperating agent" is one who
has agreed to work for the Lessor's Agent, usually through an Open Listing.
A subagent may work in a different real estate office. A Lessor's Agent or
subagent has, without limitation, the following affirmative obligations:
(A) A fiduciary duty of utmost care, integrity, and loyalty in dealing
with the Lessor.
To the Lessee and Lessor:
(A) Diligent exercise of reasonable skill and care in the performance
of the agent's duties.
(B) A duty of honesty and fair dealing and good faith.
(C) A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of,
the parties.
An agent is not obligated to reveal to either party any confidential
information obtained from the other party unless that information involves
the above affirmative duties.
The above duties of the agent in this transaction do not relieve a Lessor
or a Lessee from the responsibility to protect their own interests. You
should carefully read all agreements to ensure that they adequately express
your understanding of the transaction. A real estate agent is a person
qualified to advise about real estate ONLY. If legal or tax advise is
desired, you should consult a competent professional in that field.
THE DISCLOSURE
KIMMEN OLSEN is the agent of THE RIBEIRO CORPORATION, ONLY.
KIMMEN OLSEN 4/25/96
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KIMMEN OLSEN DATE
THE CONFIRMATION
We acknowledge receipt of a copy of this disclosure and confirm my/our
understanding of the disclosed agency relationship.
KIMMEN OLSEN 4/25/96 AM/PM
- ---------------------------------- -----------------------------------
PARK 2000 ASSOCIATES DATE TIME
KIMMEN OLSEN 4/25/96 12:20 PM
- ---------------------------------- -----------------------------------
CASINO SOFTWARE CORPORATION, DATE TIME
AN OREGON CORPORATION
INITIAL _____
11
<PAGE>
APPROVED SIGN #1
IN ACCORDANCE WITH PARAGRAPH 13 OF LEASE
NO SUBSTITUTIONS
[DIAGRAM OF APPROVED SIGN]
- ----------------------------------
LESSEE SIGNATURE
- ----------------------------------
DATE
<PAGE>
[DIAGRAM OF APPROVED SIGN]
Sign #11
Typestyle: Optima Regular or Bold Please see attached sheet for more
Color: Architectural bronze information.
Finish: Anodized
Materials: Aluminum cast
12" capitals and 8" lower case or all
10 1/2" caps. Subheadings not smaller
than 6". (Depending upon location of
signage, measurements of facade should
be taken to assure proper margins are
available.)
<PAGE>
2300 E SUNSET
[DIAGRAM OF PROPERTY]
ComputerHelp
RESOURCES INC
July 27, 1995
Mr. Bob Chamberland
Casino Software Corporation of America
2001 Front Street, NE
Suite A
Salem, OR 97303, USA
Mr. Bob Chamberland
Please consider this letter as our statement of understanding between
ComputerHelp Resources Inc. and Casino Software Corporation of America.
As of this date, ComputerHelp Resources has entered into an agreement with
Casino Software Corporation of America to provide, on an exclusive basis,
Information Technology services. These services include consulting,
servicing, technical support and supply of remote diagnostic and asset
management computers.
These services, and the terms and conditions of our agreement, are detailed
within the "CasinoWare Support and Maintenance Agreement" contract, and
related addendums.
Please feel free to contact me with any questions.
Sincerely
ComputerHelp Resources Inc.
per: Andrew Levine
- --------------------------------------------------------------------------------
Suite #4 - 11591 Cambie Road, Richmond, BC Canada V5X 3M8 - Tel 604-244-8352
Fax 604-244-8360 - USA 800-488-6052
<PAGE>
CASINOWARE(TM) SUPPORT AND MAINTENANCE AGREEMENT
This agreement between ComputerHelp Resources, Inc., Richmond B.C. Canada
and The Casino Software Corporation of America, Salem, Oregon is for the
purpose of providing ongoing support and maintenance of the hardware and
software located within the casinos operated in British Columbia by the
Great Canadian Casino Co. Ltd.
ComputerHelp Resources Inc. agrees to the following on-site hardware
maintenance coverage:
- - Guaranteed 4 hour response covering:
- - Personal computers
- - SVGA color monitors including touch screens
- - Network interface cards
- - Hard disk drives
- - Floppy disk drives
- - IDE floppy/hard disk controllers
- - RAM memory
- - I/O controller cards
- - CPU and motherboards
- - Network and assorted components
- - Multiplexes
- - Verifones
- - Printers (all)
- - Key boards
- - Wiring
- - Mice
- - Any additional hardware components as required for the operation of
CasinoWare(TM)
- - Spare components required to provide the above level of service
will be provided by the customer. If the customer does not require
the above level of service than the above level of service
required will be determined on a case by case bases.
ComputerHelp will provide and install a remote access, backup and alert
notification system consisting of the following components:
- - Host computer
- - Remote access s/w
- - Remote backup s/w
- - On-demand emergency backup services
- - Security module s/w
- - Network management s/w
- - NMS client agent s/w
- - 24 hour response team
- - Off-site storage media
- - Backup archiving, location determine by customer in conjunction
with gaming licensing requirements. Long distance charges to
achieve this component are paid by the customer.
- - Network interface card
- - CSCA dial-up line provided by customer.
- - Modem
ComputerHelp will provide a staff person who will have the following
responsibilities:
- - First contact for supporting software known as CasinoWare(TM)
- - Configure and maintain all workstations and build an inventory
database to support all technical/operational issues
<PAGE>
- - Provide ongoing oversight of all ComputerHelp Resources contractual
responsibilities
- - Act as a liaison with GCC, CSCA and government agencies in British
Columbia responsible for gaming activities and the security of same
- - Provide various reports as required by CSCA staff and consultants
- - Be bonded under ComputerHelp's bonding policy
The Casino Software Corporation of America will provide the following:
- - Access to a CSCA staff
- - Access to CasinoWare(TM) and all related manuals and documentation,
including all upgrades
- - Training on Casino(TM)Ware
- - All future installations in Canada, including but not limited to
future installations at the remaining six sites operated by the
Great Canadian Casino Co. Ltd.
- - Other support as needed to maintain installations of CasinoWare(TM)
- - Advanced notification of significant S/W upgrades
TERMS AND CONDITIONS
The Casino Software Corporation of America agrees to pay the sum of $1,200
US dollars to ComputerHelp Resources, Inc., monthly, for 24 months
beginning August 1, 1995 and ending July 1997. Each additional casino site
will be added as an addendum to this agreement. Repair of any and all
hardware will be at a reasonable cost plus 10% unless covered by warranty.
This agreement can be terminated by either party with a sixty day written
notice. Any and all legal issues will be heard in the courts of the State
of Oregon and will be final.
SIGNED: DATE: 7/27/95 SIGNED: DATE: 7/27/95
ANDREW LEVINE ROBERT CHAMBERLAND
Andrew Levine, President Robert Chamberland, Vice President
ComputerHelp Resources, Inc. The Casino Software Corporation of America
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-X
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
AND UNDERTAKING
A. Name of issuer or person filing ("Filer"): CSCC Casino Software Corporation
--------------------------------
B. This is [check one]:
[ X ] an original filing for the Filer.
[ ] an amended filing for the Filer.
C. Identify the filing in conjunction with which this form is being filed:
Name of registrant: CSCC Casino Software Corporation
Form type: 10-SB
File number (if known):
Filed by:
Date filed (if filed
concurrently, so indicate): May 28, 1996
D. The filer is incorporated or organized under the laws of
British Columbia, Canada
------------------------
and has it principal place of business at
Suite 350-13775 Commerce Parkway
--------------------------------
Richmond, British Columbia
--------------------------------
V6V 2V4
--------------------------------
Telephone: (604) 231-8007
--------------------------------
<PAGE>
E. The Filer designates and appoints John J. Halle (the "Agent"), located at:
Stoel Rives LLP
--------------------------------
900 SW Fifth Avenue
--------------------------------
Suite 2300
--------------------------------
Portland, OR 97204
--------------------------------
Telephone: (503) 294-9233
--------------------------------
as the agent of the Filer upon whom may be served any process, pleadings,
subpoenas, or other papers in
(a) Any investigation or administrative proceeding conducted by the
Commission; and
(b) Any civil suit or action brought against the Filer or to which the
Filer has been joined as defendant or respondent, in any appropriate court
in any place subject to the jurisdiction of any state or of the United
States or of any of its territories or possessions or of the District of
Columbia, where the investigation, proceeding or cause of action arises out
of or relates to or concerns (i) any offering made or purported to be made
in connection with the securities registered on Form F-10 10-SB on May 24,
1996 or any purchases or sales of any security in connection therewith;
(ii) the securities in relation to which the obligation to file an annual
report on Form 40-F arises, or any purchases or sales of such securities;
(iii) any tender offer for the securities of a Canadian issuer with respect
to which filings are made by the Filer with the Commission on Schedule
13E-4F, 14D-1F or 14D-9F; or (iv) the securities in relation to which the
Filer acts as trustee pursuant to Rule 10a-5 under the Trust Indenture Act
of 1939. The Filer stipulates and agrees that any such civil suit or action
or administrative proceeding may be commenced by the service of process
upon, and that service of an administrative subpoena shall be effected by
service upon such agent for service of process, and that the service as
aforesaid shall be taken and held in all courts and administrative
tribunals to be valid and binding as if personal service thereof had been
made.
F. Each person filing this Form in connection with:
(a) the use of Form F-9, F-10, 40-F, or SB-2 or Schedule 13E-4F,
14D-1F or 14D-9F stipulates and agrees to appoint a successor agent for
service of process and file an amended Form F-X if the Filer discharges the
Agent or the Agent is unwilling or unable to accept service on behalf of
the Filer at any time until six years have elapsed from the date of the
issuer of the securities to which such Forms and Schedules relate has
ceased reporting under the Exchange Act;
<PAGE>
(b) the use of Form F-8 or Form F-80 stipulates and agrees to appoint
a successor agent for service of process and file an amended Form F-X if
the Filer discharges the Agent or the Agent is unwilling or unable to
accept service on behalf of the Filer at any time until six years have
elapsed following the effective date of the latest amendment to such Form
F-8 or Form F-80;
(c) its status as trustee with respect to securities registered on
Form F-7, F-8, F-9, F-10, F-80, or SB-2 stipulates and agrees to appoint a
successor agent for service of process and file an amended Form F-X if the
Filer discharges the Agent or the Agent is unwilling or unable to accept
service on behalf of the Filer at any time during which any of the
securities subject to the indenture remain outstanding; and
(d) the use of Form 1-A or other Commission form for an offering
pursuant to Regulation A stipulates and agrees to appoint a successor agent
for service of process and file an amended Form F-X if the Filer discharges
the Agent or the Agent is unwilling or unable to accept service on behalf
of the Filer at any time until six years have elapsed from the date of the
last sale of securities in reliance upon the Regulation A exemption.
Each Filer further undertakes to advise the Commission promptly of any
change to the Agent's name or address during the applicable period by
amendment of this Form, referencing the file number of the relevant form in
conjunction with which the amendment is being filed.
G. Each person filing this Form, other than a trustee filing in
accordance with General Instruction I.(a) of this Form, undertakes to make
available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly, when
requested to do so by the Commission staff, information relating to: the
Forms, Schedules and offering statements described in General Instructions
I.(a), I.(b), I.(c), I.(d) and I.(f) of this Form, as applicable; the
securities to which such Forms, Schedules and offering statements relate;
and the transactions in such securities.
The Filer certifies that it has duly caused this power of attorney,
consent, stipulation and agreement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richmond, Province
of British Columbia, Canada, this 24th day of May, 1996.
Filer: CSCC Casino Software By: ROLAND M. THOMAS
Corporation -------------------------------
--------------------------- Name: Roland M. Thomas
Title: President
<PAGE>
This statement has been signed by the following person in the capacity
indicated on May 24, 1996.
JOHN J. HALLE
-----------------------------------
John J. Halle
as Agent for Service of Process for
CSCC Casino Software Corporation
