SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made as of
this 14th day of December 1998 by and between Casinovations
Incorporated, a Washington corporation (the "Company"), Xxxxxxx
Xxxxx, an individual ("Xxxxx"), Xxx Xxxxx, an individual
("Xxxxx") and Xxx Xxxx, an individual ("Xxxx", collectively with
Xxxxx and Xxxxx, the "Shareholders").
RECITALS
WHEREAS, the Department of Corporations of the State of
California has stated that, as a condition precedent to the
qualification of the Company's common stock for offer, sale or
issuance in the State of California, certain shareholders must
agree for themselves, their successors, assigns, heirs,
administrators or executors that certain shares of the Company's
common stock shall be subject to certain disabilities (the
"Disabilities") until such disabilities are removed by the
Commissioner of the Department of Corporations of the State of
California.
WHEREAS, Xxxxx and Xxxxx Xxxxx ("Xxxxx") have executed that
certain Shareholder Agreement dated August 27, 1998 whereby Xxxxx
and Xxxxx agreed to subject a certain number of their shares,
1,363,551 shares (the "Xxxxx Restricted Shares") and 470,851
shares (the "Xxxxx Restricted Shares"), respectively, to the
Disabilities;
WHEREAS, subject to the Disabilities, Xxxxx desires to
transfer, sell and assign the Xxxxx Restricted Shares to the
Shareholders and the Shareholders desire to purchase the Xxxxx
Restricted Shares from Xxxxx;
WHEREAS, the Shareholders and Xxxxx have submitted that
certain Application for Consent to Transfer Securities Pursuant
to Section 25121 of the Corporate Securities Law of 1968 (the
"Application") to the Department of Corporations of the State of
California in order to obtain prior approval to the transfer of
the Xxxxx Restricted Shares by Xxxxx to the Shareholders (the
"Trasnfer");
WHEREAS, upon the approval of the Transfer by the Department
of Corporations of the State of California, the Shareholders
desire to subject a certain portion of their respective shares to
the aforementioned disabilities and desire to enter into this
Agreement for the purposes of subjecting such shares to the
Disabilities;
NOW, THEREFORE, in consideration of the several and mutual
promises, agreements, covenants, understandings, undertakings,
representations and warranties hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree
that the Recitals are true and correct and by this reference
incorporated herein as if fully set forth, and the parties
further covenant and agree as follows:
1. APPLICABLE SHARES. The Shareholders hereby agree that
the following shares shall be restricted pursuant to the terms of
this Agreement:
a. 181,788 shares of the Company's common stock to be
held of record by Xxxxx upon consummation of the Transfer
(the "Xxxxx Shares");
b. 173,438 shares of the Company's common stock to be
held of record by Xxxxx upon consummation of the Transfer
(the "Xxxxx Shares"); and
c. 115,625 shares of the Company's common stock to be
held of record by Xxxx upon consummation of the Transfer
(the "Xxxx Shares", collectively with the Xxxxx Shares and
the Xxxxx Shares, the "Shareholder Shares").
The shares of the Company's common stock to be designated as
the Shareholder Shares shall be selected at the discretion of
Xxxxx, Xxxxx and Xxxx as long as the stock certificates
evidencing the respective shares of Xxxxx, Xxxxx and Xxxx are
surrendered to the Company as of or immediately after the
Effective Date (as defined herein) to comply with the terms of
this Agreement.
2. DISABILITIES. Subject to Section 3 of this Agreement,
the Shareholders hereby agree that the Shareholder Shares shall
be subject to the Disabilities as described below until such
Disabilities are removed by the Commissioner of the Department of
Corporations of the State of California:
a. The Shareholder Shares shall not participate in
cash or property dividends paid by the Company;
b. The Shareholder Shares shall not participate in or
be entitled to any distribution of assets in the event of a
liquidation of the Company;
c. All certificates evidencing the Shareholder Shares
shall bear upon their face a legend (the "Legend")
prominently stamped or printed thereon and in capital
letters of not less than ten-point type, as follows:
THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS, INCLUDING WAIVERS OF
DIVIDENDS AND ASSETS; AND IT IS UNLAWFUL
TO CONSUMMATE A SALE OR TRANSFER OF
THEM, OR ANY INTEREST THEREIN, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OR THE
STATE OF CALIFORNIA.
d. The holders or persons entitled to said
Shareholder Shares shall not consummate a sale or transfer
of such Shareholder Shares, or any interest therein, or
receive any consideration therefor, without the prior
written consent of the Commissioner of the Department of
Corporations of the State of California; except that
transfers may be effected without such consent pursuant to
the order or process of any court on condition that any
certificates evidencing the Shareholder Shares issued to
such transferee shall contain the Legend.
3. EFFECTIVE DATE. This Agreement shall become effective
immediately upon the date (the "Effective Date") of the approval
of the Department of Corporations of the State of California
authorizing the Transfer.
4. TERMINATION. This Agreement shall terminate upon
written order or direction of the Commissioner of the Department
of Corporations of the State of California thus removing the
Disabilities. In the event that the Disabilities are removed as
to a portion of the Shares, the shares from which the
Disabilities have been removed will be allocated pro rate between
the Xxxxx Shares and the Xxxxx Shares.
5. COOPERATION. The Company and the Shareholders agree to
cooperate fully with one another in order to achieve the purposes
of this Agreement and to take all actions and execute and deliver
all documents. whether or not specifically described herein, that
may be required to carry out the purposes and intent of this
Agreement.
6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
7. AMENDMENTS AND MODIFICATIONS. The Company and the
Shareholders agree that no amendment or modification of this
Agreement shall be deemed effective unless and until it is an
express writing executed by both the Company and the
Shareholders, and notification of such amendment or modification
is provided to the Department of Corporations of the State of
California.
8. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one
instrument.
9. BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors, predecessors, parents, affiliates, subsidiaries,
divisions, officers, directors, shareholders, employees,
advisors, consultants, insurers, attorneys, heirs, executors,
administrators and any persons claiming rights by, through or
under them.
IN WITNESS WHEREOF, the Company and Shareholders have signed
this Agreement as of the date first written above.
"XXXXX" "XXXXX"
XXXXXXX XXXXX XXX XXXXX
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxx Xxxxx
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Xxxxxxx Xxxxx, an individual Xxx Xxxxx, an individual
"XXXX" THE "COMPANY"
XXX XXXX CASINOVATIONS INCORPORATED
By: /s/ Xxx Xxxx By: /s/ Xxxxxx X. Xxxx
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Xxx Xxxx, an individual Xxxxxx X. Xxxx, President
