Good morning to all:

Ralph Smith our Sales Service Manager at CHIPCO alerted me to the message chain listed above discussing the "fading of CHIPCO chips." During 1995 and half of 1996 CHIPCO chips were produced using a defective resin supplied to us by our former resin vendor. This defective resin caused our chips to fade in color, wear thin after minor use, and crack or break if mishandled only slightly.

4.7 million chips were produced from this defective resin. All defective resin chips in use at casinos during this period have been replaced at no cost to the casino. Unfortunately, thousands of these defective resin chips were collected by chip collectors in your organization.

After CHIPCO's lawsuit win against our former resin supplier, their appeal and successful retrial victory on a technicality, we settled for a fraction of the cost ($129,000) of this "bad resin event."

I can assure everyone that quality CHIPCO ProTech Series chips do not wear thin, suffer from fading colors or break from anything less than a hammer impact. In the 14 years we have been making this chip this 11 month period May of 1995-April of 1996 is the only period of our chip making when the quality of our ProTech Series chips have been less than the very high standards we achieve each day.

CHIPCO has produced over 100 million chips in this 14 year period, and a supplier that changed our resin formula without telling us caused a huge blemish on our quality record. We are very proud of the gaming chip products we manufacture, and all 34 of the CHIPCO employees greatly appreciate the support and enthusiasm from your collector association.

Signed,

John M. Kendall
President