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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 27, 1996
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INLAND CASINO CORPORATION
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(Exact name of registrant as specified in its charter)
Utah 0-11532 33-0618806
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4225 Executive Square, Suite 1650, La Jolla, California 92037
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 546-9383
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Not Applicable
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(Former name of former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On September 30, 1996, pursuant to a Stock Purchase and Settlement and
Release Agreement, dated September 27, 1996 (the "Stock Purchase Agreement"), by
and among Jonathan Ungar, Alan Henry Woods, and Inland Casino Corporation, a
Utah corporation (the "Company"), the Company purchased 3,424,913 shares of its
common stock from Mr. Ungar (the "Ungar Shares") and 3,353,331 shares of its
common stock from Mr. Woods (the "Woods Shares").
The terms of the Stock Purchase Agreement include (i) a cash payment of
$100,000 to each of Messrs. Ungar and Woods at the closing, (ii) the issuance of
unsecured promissory notes in the aggregate principal amount of $3,500,000
($1,768,550 in principal amount to Mr. Ungar and $1,731,450 in principal amount
to Mr. Woods), with interest at a rate of 10%, payments of interest only for the
first three years, followed by three equal annual installments of principal
repayment, with interest on the remaining balance, commencing September 30,
1997, (iii) a contingent obligation (the "Initial Contingent Obligations") to
issue a total of $9,856,488 in unsecured promissory notes ($4,981,276 in
principal amount to Mr. Ungar and $4,875,212 in principal amount to Mr. Woods)
including $2,000,000 in principal amount of notes each year for four years, and
$1,856,488 in principal amount of notes to be issued in a fifth year, each note
with interest at 10%, payments of interest only for the first three years,
followed by three equal annual installments of principal plus interest on the
remaining principal balance, and (iv) another contingent obligation (the "Second
Contingent Obligation") to issue an additional $3,000,000 principal amount
($1,515,000 to Mr. Ungar and $1,485,000 to Mr. Woods) in unsecured promissory
notes (or cash, if the Company has closed a firm commitment underwritten public
offering of securities of not less than $35 million prior to the contingencies
being met) with interest at the then "preferred" or "prime" rate of interest
charged to the Company by the Company's principal bank, with interest only for
three years from date of issuance, followed by two equal annual installments of
principal, plus interest on the remaining balance.
The obligations to issue the Initial Contingent Obligations (i.e.,
$2,000,000 in notes for four years and $1,856,488 in notes for a fifth year) are
contingent upon the Company's retained earnings balance being at least
$4,000,000 for the fiscal year ending immediately prior to the date the notes
are to be issued. Dividends paid by the Company and certain other payments, if
any, are to be added back to the retained earnings balance for purposes of this
contingency calculation. The period for determining the Company's obligation to
issue each of the $2,000,000 and $1,856,488 in principal amount of notes is an
eight year period commencing with the fiscal year ending June 30, 1997. If the
$4,000,000 retained earnings test is not met in one year, the Company is not
obligated to issue the notes in that year. However, the test is to be made each
year for eight successive years commencing with the fiscal year ending June 30,
1997, but each year can be used only once during the eight year period, and only
five out of the eight years may be used. The Second Contingent Obligation is
subject to the following conditions: (i) the Barona Group of Capitan Grande Band
of Mission Indians (the "Barona Tribe") enters into a Class III Gaming Compact
(the "Compact") with the State of California which permits the operation of
video gaming machines at the Barona Casino in San Diego County; (ii) at the time
that the Barona Tribe enters into the Compact, the Company has a consulting
agreement or similar contractual arrangement with the Barona Tribe; and (iii)
consulting fees paid to the Company by the Barona Tribe relating to the Barona
Casino for any consecutive 12-month period within five years after the Barona
Tribe has entered into the Compact, equals to or exceeds one and one-half times
such consulting fees for the year ended June 30, 1996. The Company intends to
record as an additional cost of the repurchase of its common stock each
contingent obligation as each contingency is met.
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All payments pursuant to the Stock Purchase Agreement are further
subject to compliance with certain state law provisions and the Company's
Articles of Incorporation concerning repurchase transactions.
Upon payment of the $100,000 cash installment to each of Messrs. Ungar
and Woods, the Ungar Shares and the Woods Shares were cancelled and such shares
of common stock have been returned to the status of authorized but unissued
shares of common stock of the Company. As a result of the transaction, the
number of issued and outstanding shares of common stock of the Company were
reduced from 10,632,792 to 3,854,548 shares. Messrs. Ungar and Wood each
retained 190,000 shares of the common stock of the Company.
The Irrevocable Proxy dated June 30, 1994 granted by Alan Henry Woods
to L. Donald Speer, II. Chairman of the Board and Chief Executive Officer of the
Company, relating to voting of all of Mr. Woods shares now owned or hereafter
acquired remains in full force and effect; accordingly, Mr. Speer's beneficial
ownership in the shares of the Company's common stock outstanding increased from
50.5% to 65.6%. In connection with the Stock Purchase Agreement, the
Stockholders Voting Agreement dated June 30, 1994, by and between Mr. Speer and
Mr. Ungar and the Option Agreement dated June 30, 1994 by and among Messrs.
Speer, Ungar, Woods and the Company were terminated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
2.1. Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Jonathan Ungar, Alan Henry Woods, and Inland
Casino Corporation.
2.2. Promissory Note, dated September 30, 1996, in the principal
amount of $1,768,550 in favor of Jonathan Ungar.
2.3. Promissory Note, dated September 30, 1996, in the principal
amount of $1,731,450 in favor of Alan Henry Woods.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INLAND CASINO CORPORATION,
a Utah corporation
Dated: October 1, 1996 By: /s/ DUANE M. EBERLEIN
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Duane M. Eberlein
Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ------------
<S> <C> <C>
2.1 Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Jonathan Ungar, Alan Henry
Woods, and Inland Casino Corporation.
2.2 Promissory Note, dated September 30, 1996, in the principal
amount of $1,768,550 in favor of Jonathan Ungar.
2.3 Promissory Note, dated September 30, 1996, in the principal
amount of $1,731,450 in favor of Alan Henry Woods.
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AND
SETTLEMENT AND RELEASE AGREEMENT
This Stock Purchase and Settlement and Release Agreement (the
"Agreement") is hereby entered into by and among Jonathan Ungar ("Ungar"), Alan
Henry Woods ("Woods"), and Inland Casino Corporation, a Utah corporation (the
"Company") as of this 27th day of September 1996 (the "Execution Date").
RECITALS
WHEREAS, Ungar is the beneficial owner of 3,614,913 shares of
common stock of the Company ("Common Stock"); and
WHEREAS, Ungar tendered his resignation as a Director of the
Company on July 10, 1996, and the Company accepted such resignation on that
same day; and
WHEREAS, Ungar, L. Donald Speer, II, and the Company entered
into that certain Stockholders Voting Agreement, dated June 30, 1994 (the
"Stockholders Voting Agreement"), which, among other things, provides that
Messrs. Ungar and Speer will vote all shares beneficially owned by them such
that the Board of Directors of the Company shall consist of one individual
designated by Ungar and one individual designated by Mr. Speer; and
WHEREAS, Woods is the beneficial owner of 3,543,331 shares of
Common Stock; and
WHEREAS, both Ungar and Woods are parties to that certain
Option Agreement, dated June 30, 1994, by and among Ungar, Woods, L. Donald
Speer, II, and Jack R. Smith (the "Option Agreement"), which grants to each of
Mr. Speer and Mr. Smith an option to purchase 447,390 shares of Common Stock
from Ungar and 447,390 shares of Common Stock from Woods at a price of $8.38
per share; and
WHEREAS, the Company acquired from Mr. Smith his option to
purchase 447,390 shares of Common Stock from each of Ungar and Woods in
connection with Mr. Smith's sale of his shares of Common Stock pursuant to that
certain Stock Purchase and Settlement and Release Agreement, dated February 13,
1996, by and between the Company and Mr. Smith (the "JRS Agreement"); and
WHEREAS, Woods has granted to L. Donald Speer, II, an
irrevocable proxy dated June 30, 1994, relating to all of Woods' shares of
Common Stock granting Mr. Speer complete discretion to vote such shares of
Common Stock with respect to any matter requiring a vote of shareholders (the
"Irrevocable Proxy"); and
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WHEREAS, Ungar, L. Donald Speer, II, and the Company each
voluntarily elects to terminate, cancel, and rescind the Stockholders Voting
Agreement;
WHEREAS, Ungar, Woods, L. Donald Speer, II, and the Company
each voluntarily elects to terminate, cancel, and rescind the Option Agreement,
including the option to purchase 447,390 shares of Common Stock from each of
Ungar and Woods obtained by the Company from Mr. Smith pursuant to the JRS
Agreement; and
WHEREAS, Ungar and Woods each have determined to sell to the
Company on the terms and conditions hereinafter set forth substantially all of
the Common Stock beneficially owned by each of Ungar and Woods.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Transfer of Common Stock by Ungar.
(a) Ungar is the beneficial owner of 3,614,913
shares (the "Ungar Shares") of Common Stock. In consideration of (i) the
payment of $1,868,550 by the Company to Ungar pursuant to the terms set forth
in paragraph 2(b) below (the "Ungar Purchase Price"); (ii) the conditional
future payments (the "Conditional Future Payments") by the Company to Ungar of
up to $4,981,276 pursuant to the terms set forth in Section 4 below; and (iii)
the contingent bonus payment by the Company to Ungar pursuant to the terms set
forth in Section 5 below, Ungar hereby sells, assigns, transfers and delivers
to the Company, and the Company hereby purchases, all of Ungar's interest in
and to 3,424,913 of the Ungar Shares (the "Ungar Purchased Shares") as of the
business day immediately after the Execution Date (the "Stock Closing Date").
(b) The Purchase Price shall be payable as
follows:
(i) On the Stock Closing Date, the
Company shall pay Ungar $100,000. Upon payment of the $100,000, Ungar
shall transfer and deliver to the Company the Ungar Purchased Shares,
whereupon the Company shall retire such Ungar Purchased Shares to the
status of authorized but unissued shares of Common Stock.
(ii) The Company shall pay the balance of
the Ungar Purchase Price according to the terms of a promissory note
executed by the Company in favor of Ungar (the "Ungar Promissory
Note") substantially in the form of the promissory note attached
hereto as Exhibit "A". The Ungar Promissory Note sets forth
provisions for the payment to Ungar of the principal balance of the
note and interest on the unpaid principal balance at the rate of 10%
per annum; provided, however, that in no event shall such rate to be
paid to Ungar be in excess of the
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highest lawful rate permissible under applicable law and provided
further, that the Company shall only be obligated to make an
installment payment under the Ungar Promissory Note (A) to the extent
of the Company's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of the Company's Articles of
Incorporation, and (B) if and to the extent that such installment
payment could be made under Section 16-10a-640 of the Utah Revised
Business Corporation Act (the "Utah Act") or any other similar
applicable law, in each case after giving effect to payments to be
made by the Company under the JRS Agreement; and provided further,
that in assessing whether the Company shall be obligated to make an
installment payment under the Ungar Promissory Note, the Company shall
only be obligated to make such payment (or such reduced payment as
provided in the Ungar Promissory Note) to Ungar to the extent that it
could make the corresponding payment (or such reduced payment as
provided in the Woods Promissory Note) to Woods under the Woods
Promissory Note (as defined below). Each of the above-referenced
financial tests shall be made immediately prior to the time an
installment payment is scheduled. To the extent such financial tests
are not met, the Company shall be under no obligation to make such
payment and the Company shall not be deemed to be in default on the
Ungar Promissory Note. To the extent that any such installment comes
due on a day that is not a business day, such payment shall be due on
the next succeeding business day.
2. Transfer of Common Stock by Woods.
(a) Woods is the beneficial owner of 3,543,331
shares (the "Woods Shares") of Common Stock. In consideration of (i) the
payment of $1,831,450 by the Company to Woods pursuant to the terms set forth
in paragraph 2(b) below (the "Woods Purchase Price"); (ii) the Conditional
Future Payments by the Company to Woods of up to $4,875,212 pursuant to the
terms set forth in Section 4 below; and (iii) the contingent bonus payments by
the Company to Woods pursuant to the terms set forth in Section 5 below, Woods
hereby sells, assigns, transfers and delivers to the Company, and the Company
hereby purchases, all of Woods' interest in and to 3,353,331 of the Woods
Shares (the "Woods Purchased Shares") as of the Stock Closing Date.
(b) The Purchase Price shall be payable as
follows:
(i) On the Stock Closing Date, the
Company shall pay Woods $100,000. Upon payment of the $100,000, Woods
shall transfer and deliver to the Company the Woods Purchased Shares,
whereupon the Company shall retire the Woods Purchased Shares to the
status of authorized but unissued shares of Common Stock.
(ii) The Company shall pay the balance of
the Woods Purchase Price according to the terms of a promissory note
executed by the Company in favor of Woods (the "Woods Promissory
Note") substantially in the form of the promissory note attached
hereto as Exhibit "B". The Woods Promissory Note sets forth
provisions for the payment to Woods of the principal balance of the
note and
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interest on the unpaid principal balance at the rate of 10% per annum;
provided, however, that in no event shall such rate to be paid to
Woods be in excess of the highest lawful rate permissible under
applicable law and provided further, that the Company shall only be
obligated to make an installment payment under the Woods Promissory
Note (A) to the extent of the Company's unreserved and unrestricted
earned surplus and capital surplus as provided in Article VI of the
Company's Articles of Incorporation, and (B) if and to the extent that
such installment payment could be made under Section 16-10a-640 of the
Utah Act or any other similar applicable law, in each case after
giving effect to payments to be made by the Company under the JRS
Agreement; and provided further, that in assessing whether the Company
shall be obligated to make an installment payment under the Woods
Promissory Note, the Company shall only be obligated to make such
payment to Woods (or such reduced payment as provided in the Woods
Promissory Note) to the extent that it could make the corresponding
payment to Ungar (or such reduced payment as provided in the Ungar
Promissory Note) under the Ungar Promissory Note. Each of the
above-referenced tests shall be made immediately prior to the time an
installment payment is scheduled. To the extent such financial tests
are not met, the Company shall be under no obligation to make such
payment and the Company shall not be deemed to be in default on the
Woods Promissory Note. To the extent that any such installment comes
due on a day that is not a business day, such payment shall be due on
the next succeeding business day.
3. Adjusted Installment Payments. Notwithstanding
anything to the contrary herein, to the extent that the Company is unable to
make an installment payment under the Ungar Promissory Note and the Woods
Promissory Note because of the reasons set forth in subparagraph (b)(ii) of
Sections 1 and 2 herein, the Company shall assess the amount of funds that it
may legally use to make payments to Ungar and Woods and, to the extent that
there are funds available, the Company shall first make proportional payments
of principal and/or interest thereon (depending upon the type of payment that
was scheduled) to Ungar and Woods to the extent legally permissible;
thereafter, the remaining principal amount and/or unpaid interest of such
installments shall be added on a pro-rata basis to the principal amount of the
Ungar Promissory Note, the Woods Promissory Note, respectively, and such future
annual installment payments will be adjusted accordingly. Such procedures
shall apply to successive years' installment payments until the entire
principal amount and interest due thereon of the Ungar and Woods Promissory
Notes are paid in full.
4. Conditional Future Payments.
(a) The Company agrees to pay to Ungar four
additional payments in the amount of $1,000,000 each and one additional payment
in the amount of $981,276, and to pay to Woods four additional payments in the
amount of $1,000,000 each and one additional payment of $875,212 (collectively,
the "Conditional Future Payments") pursuant to the terms and conditions set
forth in paragraph 4(b) below, each such Conditional Future Payment to be made
only if the Company has unreserved and unrestricted earned surplus of at least
$4,000,000 (before such Conditional Future Payment is paid) at the end of one
of the eight fiscal years during the period commencing with the fiscal year
ended June 30, 1997 and
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ending with the fiscal year ended June 30, 2004 (the "Conditional Future
Payment Measurement Period"), such test to be made on September 15th of each
year, or if that is not a business day, the next business day ("the Conditional
Payment Date"), commencing on September 15, 1997 relating to the fiscal year
ended June 30, 1997 based upon receipt of the Company's audited financial
statements for each such year. The Company shall not be obligated to make a
Conditional Future Payment to either Ungar or Woods for any year in which the
Company does not have unreserved and unrestricted earned surplus of at least
$4,000,000. Such procedure shall apply to successive years' Conditional Future
Payments until the sooner of: (i) the Company has made all five Conditional
Future Payments to each of Ungar and Woods pursuant to paragraphs (a) and (b)
of this Section 4; or (ii) the expiration of eight years following the
Execution Date. Once a fiscal year during the Conditional Future Payment
Measurement Period is used, it may not be used again during such Conditional
Future Payment Measurement Period. Notwithstanding anything to the contrary
herein, during this eight fiscal year period, neither Ungar nor Woods shall be
entitled to more than the five additional payments specified above. To the
extent that the Company does not attain a minimum of $4,000,000 in unreserved
and unrestricted earned surplus in each of five of the eight fiscal years,
Ungar and Woods will not be entitled to the maximum amount of the Conditional
Future Payments, and if the Company does not attain such minimum of unreserved
and unrestricted earned surplus in any of the eight fiscal years, Ungar and
Woods will not be entitled to any of the Conditional Future Payments.
(b) For each of the first four years in the
Conditional Future Payment Measurement Period that the Company has unreserved
and unrestricted earned surplus of at least $4,000,000, the Company shall
execute a six-year promissory note for $1,000,000 to each of Ungar and Woods,
substantially in the forms of the promissory notes attached hereto as Exhibits
"C-1" and "C-2", respectively. In the fifth year in the Conditional Future
Payment Measurement Period that the Company has unreserved and unrestricted
earned surplus of at least $4,000,000, the Company shall pay the balance of the
Conditional Future Payments with two six-year promissory notes, one in favor of
Ungar for $981,276, and one in favor of Woods for $875,212, substantially in
the form of the promissory notes attached hereto as Exhibits "D-1" and "D-2",
respectively. The promissory notes for the Conditional Future Payments (the
"Conditional Promissory Notes") shall bear interest at a rate equal to 10% per
annum, provided that in no event shall such rate to be paid to Ungar and Woods
be in excess of the highest lawful rate permissible under applicable law.
(c) During the Conditional Future Payment
Measurement Period, the Company agrees that, for purposes of measuring whether
the Company has unreserved and unrestricted earned surplus of at least
$4,000,000, the Company will not take into account in a fiscal year in the
Conditional Future Payment Measurement Period (i) any increase in the base
salary and cash bonus of L. Donald Speer, II, of more than 10% per annum and
(ii) a payment of cash dividends by the Company to all of its shareholders,
paid in such fiscal year. If in a year during the Conditional Future Payment
Measurement Period the Company (i) increases Mr. Speer's salary and cash bonus
by more than 10% from that received by Mr. Speer in the immediately preceding
year, or (ii) pays cash dividends to its shareholders, and such increase in Mr.
Speer's salary and cash bonus or such payment of
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cash dividends to the Company's shareholders causes the Company's unreserved
and unrestricted earned surplus to be less than $4,000,000 for such fiscal
year, the Company will nonetheless be obligated to make the Conditional Future
Payment to each of Ungar and Woods for such fiscal year.
(d) Notwithstanding anything to the contrary
herein, the Company shall only be obligated to make installment payments under
the Conditional Promissory Notes pursuant to this Section 4:
(i) To the extent of the Company's
unreserved and unrestricted earned surplus and capital surplus as
provided in Article VI of the Company's Articles of Incorporation, and
(ii) If and to the extent that such
installment payment could be made under Section 16-10a-640 of the Utah
Act or any other similar applicable law.
Such determination shall be made after such similar determination has been made
pursuant to Section 1(b) and Section 2(b) of this Agreement.
(e) Notwithstanding anything to the contrary
herein, to the extent that the Company is unable to make an installment payment
under the Conditional Promissory Notes because of the reasons set forth in
subparagraph (d) of this Section 4 herein, the Company shall assess the amount
of funds that it may legally use to make payments to Ungar and Woods and, to
the extent that there are funds available, the Company shall first make
proportional payments of principal and/or interest thereon (depending upon the
type of payment which was scheduled) to Ungar and Woods to the extent legally
permissible; thereafter, the remaining principal amount and/or unpaid interest
of such installments shall be added on a pro-rata basis to the principal amount
of the respective Conditional Promissory Note, and future annual installment
payments will be adjusted accordingly. Such procedures shall apply to
successive years' installment payments under each Conditional Promissory Note
until the entire principal amount and interest due under each of the
Conditional Promissory Notes are paid in full.
5. Contingent Bonus Payments.
(a) The Company agrees to pay to Ungar an
additional $1,515,000, and to pay to Woods an additional $1,485,000
(collectively, the "Contingent Bonus Payments"), if all of the following
conditions are satisfied within the period from the Execution Date to September
30, 2004.
(i) The Barona Group of Capitan Grande
Band of Mission Indians (the "Barona Tribe") enters into a Class III
Gaming Compact (the "Compact") with the State of California which
permits the operation of video gaming machines at the Barona Casino in
San Diego County; and
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(ii) At the time that the Barona Tribe
enters into the Compact, the Company has a consulting agreement with
the Barona Tribe or other contractual arrangement to provide gaming
management services to the Barona Tribe; and
(iii) Consulting fees paid to the Company
by the Barona Tribe relating to the Barona Casino (as defined in the
Amended and Restated Consulting Agreement, dated April 1, 1996, by and
between the Barona Tribe and the Company) for any consecutive
twelve-month period beginning on the first day of any month after the
date on which the Barona Tribe enters into the Compact and ending no
later than five (5) years after the date on which the Barona Tribe
enters into the Compact (such test to be made within 45 days after the
last month in such measurement period) are equal to or greater than
one and one-half (1 1/2) times such consulting fees for the fiscal
year ended June 30, 1996.
(b) The Company shall make the Contingent Bonus
Payments to each of Ungar and Woods one (1) year after all of the conditions
set forth in Subparagraphs (a)(i), (a)(ii) and (a)(iii) of this Paragraph 5 are
met (the "Contingent Payment Date"); provided, however, that if the Company has
not closed an underwritten, firm commitment public offering in an amount not
less than $35 million by the Contingent Payment Date, the Company shall pay the
Contingent Bonus Payments with two five-year notes, one in favor of Ungar for
$1,515,000, and one in favor of Woods for $1,485,000, substantially in the
forms of the promissory notes attached hereto as Exhibits "E-1" and "E-2",
respectively, each commencing on the Contingent Payment Date (the "Ungar
Contingent Payment Note" and the "Woods Contingent Payment Note"). The Ungar
Contingent Payment Note and the Woods Contingent Payment Note shall each bear
interest at a rate equal to the "preferred" or "prime" lending rate which the
Company is charged by its principal lending bank on the Contingent Payment
Date, provided that in no event shall such rate to be paid to Ungar and Woods
be in excess of the highest lawful rate permissible under applicable law.
(c) Notwithstanding anything to the contrary
herein, the Company shall only be obligated to make the Contingent Bonus
Payments pursuant to this Section 5 in whole or through installments:
(i) To the extent of the Company's
unreserved and unrestricted earned surplus and capital surplus as
provided in Article VI of the Company's Articles of Incorporation, and
(ii) If and to the extent that such
installment payment could be made under Section 16-10a-640 of the Utah
Act or any other similar applicable law.
Such determination shall be made after such similar determination has been made
pursuant to Section 1(b) and Section 2(b) of this Agreement.
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(d) Notwithstanding anything to the contrary
herein, to the extent that the Company is unable to make an installment payment
under the Ungar Contingent Payment Note and the Woods Contingent Payment Note
because of the reasons set forth in subparagraph (c) of this Section 5 herein,
the Company shall assess the amount of funds that it may legally use to make
payments to Ungar and Woods and, to the extent that there are funds available,
the Company shall first make equal payments of principal and/or interest
thereon (depending upon the type of payment which was scheduled) to Ungar and
Woods to the extent legally permissible; thereafter, the remaining principal
amount and/or unpaid interest of such installments shall be added on a pro-rata
basis to the principal amount of the Ungar Contingent Payment Note and the
Woods Contingent Payment Note, respectively, and future annual installment
payments will be adjusted accordingly. Such procedures shall apply to
successive years' installment payments until the entire principal amount and
interest due thereon of the Ungar Contingent Payment Note and Woods Payment
Note are paid in full.
6. Representations and Warranties of Ungar. Ungar
represents and warrants to the Company, as of the Execution Date, as follows:
(a) Ungar beneficially owns all of the Ungar
Shares and does not beneficially own any securities of the Company other than
the Ungar Shares.
(b) This Agreement has been duly executed and
delivered by Ungar and constitutes a valid and binding obligation of Ungar,
enforceable against Ungar in accordance with its terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency or other
similar laws relating to the rights of creditors generally and the effect of
general principles of equity.
(c) The execution and delivery of this Agreement
by Ungar does not and will not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination or acceleration
of any obligation or to loss of a benefit under, or result in the creation of
any encumbrance or restriction of any kind upon any of the properties or assets
of Ungar under, any provision of (i) any agreement or arrangement to which
Ungar is a party or by which any of his properties or assets are bound, (ii)
any judgment, order or other decree applicable to Ungar or his properties or
assets, or (iii) any statute, regulation or other law applicable to Ungar or
his properties or assets (including, without limitation, Regulations G,T,U and
X of the Board of Governors of the Federal Reserve System).
(d) No consent, approval, license, permit, order
or other authorization of, or registration, declaration or other filing with,
any court, administrative agency or other governmental authority or
instrumentality, domestic or foreign, or any third person, is required to be
obtained or made by Ungar in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
8
<PAGE> 9
(e) Ungar has good and valid title to the Ungar
Purchased Shares, free and clear of any encumbrances or restrictions of any
kind. Upon delivery to the Company on the Stock Closing Date of certificates
representing the Ungar Purchased Shares, duly endorsed by Ungar for transfer to
the Company, and upon Ungar's receipt of the consideration hereunder, good and
valid title to such Ungar Purchased Shares will pass to the Company, free and
clear of any encumbrances or restrictions of any kind, other than those arising
from acts of the Company or its affiliates. Other than this Agreement, the
Option Agreement, and the Stockholders Voting Agreement, the Ungar Purchased
Shares are not subject to any voting trust agreement or other agreement,
arrangement or understanding, including any such agreement, arrangement or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of such Ungar Purchased Shares.
(f) There are no (i) outstanding judgments,
orders, writs, injunctions or other decrees of any court, administrative
agency, or other governmental authority or instrumentality or arbitration
tribunal against Ungar that affect or could affect the ability of Ungar to
consummate the transactions contemplated hereby or (ii) actions, suits, claims
or legal, administrative or arbitration proceedings or investigations pending
or threatened against Ungar that affect or could affect the ability of Ungar to
consummate the transactions contemplated hereby.
(g) Ungar is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
(h) Ungar, by reason of his business or financial
experience, has the capacity to protect his own interest in connection with the
transactions contemplated by this Agreement relating to Ungar, including,
without limitation, the acceptance by Ungar of the Ungar Promissory Notes and,
if applicable, the Ungar Contingent Promissory Note (collectively, the "Ungar
Transaction").
(i) The benefits related to the Ungar Transaction
are accepted by Ungar for his own account and not with a view to any public
distribution thereof, and Ungar will not offer to sell or otherwise dispose of
any such benefits in violation of the registration requirements of the
Securities Act or any applicable state securities laws.
(j) Ungar understands that the documents or
instruments relating to the benefits related to the Ungar Transaction,
individually or collectively, have not been and will not be registered under
the Securities Act or the securities laws of any state in reliance upon
exemptions therefrom for nonpublic offerings. Ungar further represents that he
understands that such benefits must be held indefinitely unless the sale
thereof subsequently is registered under the Securities Act and any applicable
state securities laws or unless an exemption from such registration is
available and that any document or instrument evidencing any such benefits
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
9
<PAGE> 10
"THIS DOCUMENT OR INSTRUMENT HAS BEEN ISSUED IN CONNECTION
WITH A CERTAIN STOCK PURCHASE AND SETTLEMENT AND RELEASE
AGREEMENT DATED SEPTEMBER 27, 1996 BY AND AMONG INLAND
CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY
WOODS (COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE
OBTAINED FROM THE CORPORATE SECRETARY OF INLAND) AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS DOCUMENT OR
INSTRUMENT MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED
UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED
AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION
UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED."
(k) Neither the Company nor any person acting on
its behalf, has engaged in any form of general solicitation or general
advertising, including, without limitation, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media
or broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising in
connection with the Ungar Transaction.
Notwithstanding anything to the contrary herein, prior to the Company being
obligated to purchase the Ungar Purchased Shares, Ungar shall deliver to the
Company a certificate dated the Stock Closing Date stating that each of the
representations and warranties set forth in this Section 6 are true and correct
as of the Stock Closing Date.
7. Representations and Warranties of Woods. Woods
represents and warrants to the Company, as of the Execution Date, as follows:
(a) Woods beneficially owns all of the Woods
Shares and does not beneficially own any securities of the Company other than
the Woods Shares.
(b) This Agreement has been duly executed and
delivered by Woods and constitutes a valid and binding obligation of Woods,
enforceable against Woods in accordance with its terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency or other
similar laws relating to the rights of creditors generally and the effect of
general principles of equity.
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<PAGE> 11
(c) The execution and delivery of this Agreement
by Woods does not and will not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination or acceleration
of any obligation or to loss of a benefit under, or result in the creation of
any encumbrance or restriction of any kind upon any of the properties or assets
of Woods under, any provision of (i) any agreement or arrangement to which
Woods is a party or by which any of his properties or assets are bound, (ii)
any judgment, order or other decree applicable to Woods or his properties or
assets, or (iii) any statute, regulation or other law applicable to Woods or
his properties or assets (including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System).
(d) No consent, approval, license, permit, order
or other authorization of, or registration, declaration or other filing with,
any court, administrative agency or other governmental authority or
instrumentality, domestic or foreign, or any third person, is required to be
obtained or made by Woods in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(e) Woods has good and valid title to the Woods
Purchased Shares, free and clear of any encumbrances or restrictions of any
kind. Upon delivery to the Company on the Stock Closing Date of certificates
representing the Woods Purchased Shares, duly endorsed by Woods for transfer to
the Company, and upon Woods' receipt of the consideration hereunder, good and
valid title to such Woods Purchased Shares will pass to the Company, free and
clear of any encumbrances or restrictions of any kind, other than those arising
from acts of the Company or its affiliates. Other than this Agreement, the
Irrevocable Proxy and the Option Agreement, the Woods Purchased Shares are not
subject to any voting trust agreement or other agreement, arrangement or
understanding, including any such agreement, arrangement or understanding
restricting or otherwise relating to the voting, dividend rights or disposition
of such Woods Purchased Shares.
(f) There are no (i) outstanding judgments,
orders, writs, injunctions or other decrees of any court, administrative
agency, or other governmental authority or instrumentality or arbitration
tribunal against Woods that affect or could affect the ability of Woods to
consummate the transactions contemplated hereby or (ii) actions, suits, claims
or legal, administrative or arbitration proceedings or investigations pending
or threatened against Woods that affect or could affect the ability of Woods to
consummate the transactions contemplated hereby.
(g) At all times during the negotiations relating
to the Woods Transaction to the date of this Agreement, Woods has been and is a
citizen of Australia and a resident of Hong Kong;
(h) The transactions contemplated by this
Agreement relating to Woods, including, without limitation, the acceptance by
Woods of the Woods Promissory
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<PAGE> 12
Notes and, if applicable, the Woods Contingent Promissory Note (collectively
the "Woods Transaction") were received in Hong Kong.
(i) Woods, by reason of his business or financial
experience, has the capacity to protect his own interest in connection with the
Woods Transaction.
(j) Woods is not a "U.S. Person" as defined on
Exhibit "F" hereto and the Woods Transaction is for Woods' own account and not
for the account of any other person, including a "U.S. Person".
(k) The benefits related to the Woods Transaction
are accepted by Woods for his own account and not with a view to any public
distribution thereof, and Woods will not offer to sell or otherwise dispose of
any benefits in violation of the registration requirements of the Securities
Act or any applicable state securities laws.
(l) Woods does not engage either for all or part
of his time, directly or indirectly, as an agent, a broker, or a principal, in
the business of offering, buying, selling or otherwise dealing or trading in
the securities issued by another person.
(m) Woods understands that the documents or
instruments relating to the benefits related to the Woods Transaction,
individually, or collectively have not been and will not be registered under
the Securities Act or the securities laws of any state in reliance upon
exemptions therefrom for nonpublic offerings. Woods further represents that he
understands that benefits must be held indefinitely unless the sale thereof
subsequently is registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration is available and
that any document or instrument evidencing any such benefit shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THIS DOCUMENT OR INSTRUMENT HAS BEEN ISSUED IN CONNECTION
WITH A CERTAIN STOCK PURCHASE AND SETTLEMENT AND RELEASE
AGREEMENT DATED SEPTEMBER 27, 1996 BY AND AMONG INLAND
CASINO CORPORATION ("INLAND"), ALAN HENRY WOODS AND JONATHAN
UNGAR (COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE
OBTAINED FROM THE CORPORATE SECRETARY OF INLAND) AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OR TO A "U.S. PERSON" (AS DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THE DOCUMENT OR INSTRUMENT
IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
DOCUMENT OR
12
<PAGE> 13
INSTRUMENT MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE
SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE
SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY
APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED."
(n) Neither the Company nor any person acting on
its behalf, has engaged in any form of general solicitation or general
advertising, including, without limitation, any advertisement, article, notice
or other communication published in any newspaper, magazine, or similar media
or broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising in
connection with the Woods Transaction.
Notwithstanding anything to the contrary herein, prior to the Company being
obligated to purchase the Woods Purchased Shares, Woods shall deliver to the
Company a certificate dated the Stock Closing Date stating that each of the
representations and warranties set forth in this Section 7 are true and correct
as of the Stock Closing Date.
8. General Release by Ungar. In consideration of the
payments specified in Sections 1, 4, and 5 of this Agreement and the other
matters described herein, the receipt and adequacy of which are hereby
acknowledged, Ungar, for himself and his heirs, executors, administrators,
assigns, affiliates, successors and agents (collectively, the "Ungar
Affiliates") hereby fully and without limitation releases and forever
discharges the Company and its agents, representatives, shareholders, parents,
subsidiaries, divisions, owners, officers, directors, employees, consultants,
attorneys, auditors, accountants, investigators, affiliates, successors and
assigns (collectively, the "Releasees"), both individually and collectively,
from any and all rights, claims, demands, liabilities, actions, causes of
action, damages, losses, costs, expenses and compensation, of whatever nature
whatsoever, known or unknown, fixed or contingent, other than any payments
owing by the Company to Ungar under the Ungar Notes or otherwise under this
Agreement ("Ungar Released Claims"), that Ungar or the Ungar Affiliates has or
may have or may claim to have against the Releasees by reason of any matter,
cause, or thing whatsoever, from the beginning of time to the date hereof,
including, without limiting the generality of the foregoing, any Ungar Released
Claims arising out of, based upon, or relating to the Ungar Transaction or
investigation of Ungar by the Company or the other Releasees, Ungar's tenure as
a Director of the Company, any agreement or compensation arrangement between
Ungar and the Company or the other Releasees, or any act or occurrence in
connection with any actual, existing, proposed, prospective or claimed
ownership interest of any nature of Ungar or the Ungar Affiliates in equity
capital or rights in equity capital or other securities of the Company or the
other Releasees to the maximum extent permitted by law.
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<PAGE> 14
9. General Release by Woods. In consideration of the
payments specified in Sections 2, 4, and 5 of this Agreement and the other
matters described herein, the receipt and adequacy of which are hereby
acknowledged, Woods, for himself and his heirs, executors, administrators,
assigns, affiliates, successors and agents (collectively, the "Woods
Affiliates") hereby fully and without limitation releases and forever
discharges the Company and the other Releasees, both individually and
collectively, from any and all rights, claims, demands, liabilities, actions,
causes of action, damages, losses, costs, expenses and compensation, of
whatever nature whatsoever, known or unknown, fixed or contingent, other than
any payments owing by the Company to Woods under the Woods Notes or otherwise
under this Agreement ("Woods Released Claims") that Woods or the Woods
Affiliates has or may have or may claim to have against the Releasees by reason
of any matter, cause, or thing whatsoever, from the beginning of time to the
date hereof, including, without limiting the generality of the foregoing, any
Woods Released Claims arising out of, based upon, or relating to the Woods
Transactions or investigation of Woods by the Company or the other Releasees,
any agreement or compensation arrangement between Woods and the Company or the
other Releasees, or any act or occurrence in connection with any actual,
existing, proposed, prospective or claimed ownership interest of any nature of
Woods or the Woods' Affiliates in equity capital or rights in equity capital or
other securities of the Company or the other Releasees to the maximum extent
permitted by law.
10. General Release by the Company. In consideration of
the mutual promises and agreements described in this Agreement, the receipt and
adequacy of which are hereby acknowledged, the Company and its agents,
representatives, parents, subsidiaries, divisions, officers, directors,
employees, affiliates, successors and assigns (collectively, the "Company
Affiliates") hereby fully and without limitation release and forever discharge
Ungar and Woods and their respective heirs, executors, administrators, assigns,
affiliates, successors and agents (collectively, the "Ungar/Woods Releasees"),
both individually and collectively, from any and all rights, claims, demands,
liabilities, actions, causes of action, damages, losses, costs, expenses and
compensation, of whatever nature whatsoever, known or unknown, fixed or
contingent ("Company Claims"), that the Company or any Company Affiliate has or
may have or may claim to have against the Ungar/Woods Releasees by reason of
any matter, cause, or thing whatsoever, from the beginning of time to the date
hereof, including, without limiting the generality of the foregoing, the
investigation of Ungar or Woods or any of the Ungar/Woods Releasees by the
Company, Ungar's tenure as a Director of the Company, any agreement or
compensation arrangement between Ungar and/or Woods and the Company or any
other Ungar/Woods Releasee, to the maximum extent permitted by law; provided,
however, that this General Release shall not apply to any Company Claim arising
out of, based upon, or relating to the Ungar Transaction or the Woods
Transaction, or any act or occurrence in connection with any actual, existing,
proposed, prospective or claimed ownership interest of any nature of Ungar or
Woods or any Ungar or Woods Affiliates in equity capital or rights in equity
capital or other securities of the Company.
11. Release of Unknown Claims by Ungar and Woods. Each
of Ungar and Woods is aware of California Civil Code Section 1542, which
provides as follows:
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<PAGE> 15
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
With full awareness and understanding of the above provision,
each of Ungar and Woods hereby waive any rights either may have under Section
1542. Each of Ungar and Woods intends to, and hereby does, release Releasees
from claims that each does not presently know or suspect to exist at this time.
However, each of Ungar and Woods is not waiving any rights or claims that may
arise out of acts or events that occur after the Execution Date.
12. Breach of Release. Each of Ungar and Woods agrees
that if either hereafter commences, joins in, or in any manner seeks relief
through any suit arising out of, based upon, or relating to any of the Claims
released by either hereunder, or in any manner asserts against the Company or
the Releasees any of the claims released hereunder (collectively, the "Released
Claims"), the party asserting such Released Claim shall pay to the Company or
such Releasee, as the case may be, in addition to any other damages caused to
the Company or such Releasee, as the case may be, all attorneys' fees incurred
in defending or otherwise responding to said suit or claim.
13. Rights Related to Settlement and Release Provisions.
In connection with the settlement and release provisions of this Agreement,
each of Ungar and Woods is aware that he has the right to consult with an
attorney before signing this Agreement and is hereby advised by the Company to
do so.
14. Confidentiality of Agreement. Except as may be
required by law or otherwise made publicly available by the Company, neither
Ungar nor Woods, nor their respective attorneys or any person acting by,
through, under or in concert with any of them, shall disclose any of the terms
of or facts relating to this Agreement or the negotiation thereof to any
individual or entity, except for disclosures made between Ungar or Woods and
their respective attorneys, spouses, children, or tax advisors.
15. Proprietary Information. Each of Ungar and Woods
acknowledges that certain information, observations, and data obtained by Ungar
as a Director and principal shareholder and by Woods as a principal shareholder
of the Company (including without limitation certain financial information,
shareholder information, product design information, business plans, marketing
plans or proposals, customer lists and other customer information) are the sole
property of the Company and constitute trade secrets of the Company. Each of
Ungar and Woods agrees to promptly destroy all files, customer lists, financial
information and other Company property that are in either Ungar's or Woods'
possession or control without making copies thereof. Each of Ungar and Woods
further agrees that he will not disclose to any person or use any such
information, observations or data without the written consent of the Company's
Board of Directors, unless and to the extent that the aforementioned matters
become generally known to and available for use by the public other
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<PAGE> 16
than as a result of either Ungar's or Woods' acts or omissions to act, which
acts or omissions were unauthorized by the Company. Further, each of Ungar and
Woods acknowledges that any unauthorized use of trade secrets will cause
irreparable harm to the Company and will give rise to an immediate action by
the Company for injunctive relief. If either Ungar or Woods is served with a
deposition subpoena or other legal process calling for the disclosure of such
information, or if either is contacted by any third person requesting such
information, he will immediately notify the Company's General Counsel and will
fully cooperate with the Company in minimizing the disclosure thereof.
16. Unfair Competition.
(a) Each of Ungar and Woods agrees not to
(whether as an employee, director, owner, stockholder, consultant, limited or
general partner, or otherwise), for himself or for any other person or entity,
engage in any unfair competition with the Company.
(b) Each of Ungar and Woods also covenants and
agrees not to intentionally interfere with, disrupt, or attempt to disrupt, the
relationship, contractual or otherwise, between the Company and any customer of
the Company as of the Execution Date.
(c) Each of Ungar and Woods acknowledges that any
unfair competition or misuse of trade secret or proprietary information
belonging to the Company, or any violation of Sections 14 through 16 of this
Agreement, will result in irreparable harm to the Company and will give rise to
an immediate action by the Company for injunctive relief.
17. Cooperation Clause. Each of Ungar and Woods agrees
to cooperate with the Company and its counsel (a) in any investigations
(including internal investigations) and audits of the Company's management's
current and past conduct and business and accounting practices and (b) in the
Company's defense of, or other participation in, any administrative, judicial,
or other proceeding arising from any charge, complaint or other action that has
been or may be filed relating to the period during which Ungar and Woods were
shareholders of the Company. Except as required by law or authorized in
advance by the Company's Board of Directors or otherwise made publicly
available by the Company, neither Ungar nor Woods will communicate, directly or
indirectly, with any third party concerning the management or governance of the
Company, the operations of the Company and the legal positions taken by the
Company, or the financial status of the Company. Each of Ungar and Woods shall
direct inquiries from third parties on these issues to the Company. Each of
Ungar and Woods acknowledges that any violation of this Section 17 will result
in irreparable harm to the Company and will give rise to an immediate action by
the Company for injunctive relief.
18. Non-disparagement. The parties will use their best
efforts not to disparage or otherwise publish or communicate derogatory
statements or opinions about any other party to any third party for a period of
three (3) years after the Execution Date. It
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<PAGE> 17
shall not be a breach of this Section 18 for any party to testify truthfully in
any judicial or administrative proceeding, or to make factually accurate
statements in legal or public filings.
19. Indemnification of the Company by Ungar and Woods.
Subject to Section 20 hereof, each of Ungar and Woods, jointly and severally,
shall indemnify, defend, and hold harmless the Company, the Board of Directors
of the Company, and each individual member of the Board of Directors (to the
extent such person shall have personal liability) from and against any and all
claims, losses, damages, liabilities, and expenses (including, without
limitation, settlement costs and any legal, accounting, and other expenses for
investigating or defending any actions or threatened actions) (collectively,
"Damages") arising out of lawsuits brought by creditors of the Company existing
on the Execution Date or lawsuits brought by Shareholders of the Company
relating to or arising out of or in connection with the purchase of the Ungar
Purchased Shares or the Woods Purchased Shares.
20. General Indemnification Procedures.
(a) A party seeking indemnification pursuant to
Section 19 (an "Indemnified Party") shall give prompt notice to the party from
whom such indemnification is sought (the "Indemnifying Party") of the assertion
of any claim, or the commencement of any action, suit or proceedings, in
respect of which indemnity may be sought hereunder and will give the
Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request, but failure to give such notice shall not relieve
the Indemnifying Party of any liability hereunder (except to the extent that
the Indemnifying Party has suffered actual prejudice thereby). The
Indemnifying Party shall have the right, exercisable by written notice to the
Indemnified Party within 15 days of receipt of written notice from the
Indemnified Party of the commencement of or assertion of any claim or action,
suit or proceeding by a third party in respect of which indemnity may be sought
hereunder (a "Third Party Claim"), to assume the defense of such Third Party
Claim with counsel acceptable to the Indemnified Party.
(b) The Indemnified Party shall have the right to
participate, at its own expense, in the defense of any Third Party Claim that
the Indemnifying Party is defending.
(c) The Indemnifying Party, if it shall have
assumed the defense of any Third Party Claim, shall have the sole and exclusive
right to consent to the entry of judgment with respect to, or otherwise settle
such Third Party Claim only to the extent such settlement requires only the
payment of money damages, all of which will be paid by the Indemnifying Party.
If such settlement requires any other action by the Indemnified Party or if
such settlement would have, in the reasonable judgment of the Indemnified
Party, a material adverse effect on the Indemnified Party's business (including
any material impairment of its relationships with third parties related to the
Indemnified Party's business), then such settlement shall only be made with the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. The Indemnified Party shall have the sole and exclusive
right to settle any Third Party Claim, on such terms and conditions as it deems
reasonably appropriate, to the extent such Third Party Claim involves equitable
or other non-
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<PAGE> 18
monetary relief, and shall have the right to settle any Third Party Claim
involving monetary damages with the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld.
(d) Whether or not the Indemnifying Party chooses
to defend or prosecute any Third Party Claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony, and attend such conferences, discovery proceeding,
hearings, trials and appeals, as may be reasonably requested in connection
therewith.
(e) For purposes of calculating the amount of
Damages for which any claim may be made, a credit will be given to the extent
of any insurance recovery received by the Company, Ungar, or Woods, as the case
may be, resulting from such Damages or from the subject matter giving rise to
such Damages.
21. Right of Setoff. To the extent that Ungar and/or
Woods fail to meet their joint and several obligations pursuant to Section 19,
the Company retains the right to set off any amounts due to Ungar and/or Woods
pursuant to this Agreement (including, without limitation, amounts due under
the various promissory notes issued to Ungar and/or Woods) against payments to
be made by Ungar and/or Woods pursuant to Section 19 herein following the
Execution Date. Such right of setoff shall be separate from any other rights
available to the Company and shall not effect any right that any individual
director may have against Ungar and/or Woods.
22. Remedies for Breach. If either Ungar or Woods
materially breaches any of his respective representations and warranties set
forth in Sections 6 or 7, respectively, under this Agreement, in addition to
whatever other rights the Company may have, the breaching party (parties) shall
forfeit his (their) right to receive any further payments or benefits under
this Agreement, including, without limitation, the payments under Sections 1,
2, 3, 4, and 5 herein. If either Ungar or Woods materially breaches any other
representation, warranty, covenant, condition or obligation under this
Agreement (other than set forth in Sections 6 or 7 herein), in addition to
whatever other rights the Company may have, the Company, after notifying the
breaching party (parties) of such breach, shall have the right to stop all
further payments or benefits under this Agreement to the breaching party
(parties), including, without limitation, the payments under Sections 1, 2, 3,
4 and 5 herein, until such dispute is resolved.
23. Registration of Shares.
23.1
(a) Demand Registration Rights on Form
S-3: Ungar and Woods each have one right to require the Company to file a
registration statement of the Company's Common Stock on Form S-3 or any
successor form (provided that the gross offering price is not less than
$150,000 and the Company is eligible to use Form S-3 for sales by selling
shareholders).
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<PAGE> 19
(b) "Registrable Shares" means, at any
time, the fully paid shares of Common Stock owned at such time by Ungar
(limited to the difference between the Ungar Shares and the Ungar Purchased
Shares), Woods (limited to the difference between the Woods Shares and the
Woods Purchased Shares), or any other person to whom the Company has granted or
may grant registration rights ("covered shareholder").
23.2 Piggyback Registration Rights.
(a) Whenever at any time after September
30, 1996, the Company proposes to register any of its securities under the
Securities Act on Forms S-1, S-2, S-3, SB-1, SB-2 or any successor form, it
shall each time give prompt written notice to each of Ungar and Woods and each
other shareholder of the Company possessing piggyback registration rights
relating to the shares of the Company's capital stock pursuant to any agreement
of its intention so to do and, upon the written request of such shareholder(s)
given within thirty days after the giving of any such notice (which request
shall state the proposed method of distribution of such shares of Common
Stock), the Company shall include in the proposed registration (the "Proposed
Registration") all Registrable Shares with respect to which the Company has
received a written request from such shareholder(s) for inclusion therein
within thirty days after receipt of the Company's notice. Except as may
otherwise be provided in this Agreement, Registrable Shares with respect to
which such request for registration has been received will be registered by the
Company and offered to the public pursuant to this Section 23.2 on the same
terms and subject to the same conditions as are applicable to the Proposed
Registration.
(b) If the managing underwriter or
underwriters advise the Company that in its or their opinion or, in the case of
a Proposed Registration not being underwritten, the Company shall reasonably
determine after consultation with a reputable investment banking firm that, the
number of shares proposed to be sold in a registration statement exceeds the
number which can be reasonably sold in such offering, the Company will include
in such registration the number of shares of Common Stock which, in the opinion
of such underwriter or underwriters, or the Company, as the case may be, can be
sold, as follows: (i) first, if the registration is pursuant to a demand
registration right, the Registrable Shares proposed to be sold by the
requesting shareholder, (ii) second, the shares of Common Stock the Company
proposes to sell, and (iii) third, on a pro rata basis, Registrable Shares
requested by other persons to be included in such registration in proportion to
the number of shares requested by each such other person to be included in such
registration.
(c) If, after complying with the
procedures specified in Section 23.2(b), not all the Registrable Shares
requested by the shareholders are included in such registration, the Company
will use its best efforts to effect a separate registration of such Registrable
Shares, and the Company shall use its best efforts to cause such separate
registration to become effective not later than one hundred and twenty (120)
days after the effective date of the Proposed Registration. Notwithstanding
anything herein to the contrary, the Company may, to the extent then permitted
by applicable law, at any time prior to the effective date of the Proposed
Registration, determine in its sole discretion not to effect such
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<PAGE> 20
registration, in which event the Company shall have no further obligation under
this Section 23.2 to register shares of Common Stock under such Proposed
Registration, except that the Company shall reimburse the shareholders for any
out-of-pocket fees and expense incurred by them in connection with such
Proposed Registration.
23.3 Registration Procedures.
(a) Whenever the Company is required by the
provisions of this Section 23 to include Registrable Shares in a Proposed
Registration, the Company shall (unless it shall have determined to withdraw or
abandon the Proposed Registration), as expeditiously as possible:
(i) Cooperate with the covered shareholders
and any underwriter responsible for the sale of Registrable Shares in
their review of the Company in connection with such registration;
(ii) Prepare and file with the Securities
and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
180 days from the day of its effectiveness and any additional period as
is necessary to correct any of the conditions referred to in Section
23.3(a)(v)(A) or (B) below (the "Period of Availability") and to comply
with the provisions of the Securities Act and the Exchange Act, with
respect to the disposition of all securities covered by such
registration statement for such periods. At the expiration of the
Period of Availability, the Company may file a post-effective amendment
to such registration statement to deregister any unsold Registrable
Shares;
(iii) Furnish to each covered shareholder
selling Registrable Shares pursuant to the registration statement (a
"Public Selling Shareholder"), without charge, such number of copies of
the prospectus forming a part of such registration statement (including
each preliminary prospectus) as conforms with the requirements of the
Securities Act, and such other documents as such shareholder may
reasonably request in order to facilitate the disposition of such
securities;
(iv) Use its best efforts to register or
qualify the securities covered by such registration statement under the
securities or blue sky laws of such jurisdiction as counsel for the
Public Selling Shareholders shall reasonably request, and do any and all
other acts and things that may be necessary or advisable to enable the
Public Selling Shareholders, or any underwriter offering such securities
for the Public Selling Shareholders, to consummate the disposition
thereof in such jurisdiction; provided, however, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would
subject it to service of process in suits other than those arising out
of the offer or sale of the securities covered by such registration
statement in any jurisdiction where it is not now so subject;
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<PAGE> 21
(v) (A) Notify the Public Selling
Shareholders, any time a prospectus relating the Registrable Shares is
required to be delivered under the Securities Act, of the happening of
any event as a result of which the prospectus forming a part of such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and (B) at
the request of the Public Selling Shareholders, prepare and furnish the
Public Selling Shareholders, without charge, with a reasonable number of
copies of any supplement to or any amendment of such prospectus that may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; and
(vi) Enter into an underwriting agreement,
in the form then customarily used by the underwriters managing the
public offering and consistent with the provisions of this Section 23,
with the underwriters of the securities covered by such registration
statement.
(b) Each Public Selling Shareholder
shall notify the Company, any time a prospectus relating to the Registrable
Shares is required to be delivered under the Securities Act, of the happening
of any event relating to such Public Selling Shareholder, the Registrable
Shares or the extended method of disposition of such securities, as a result of
which such prospectus includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances then
existing. Each Public Selling Shareholder shall furnish the Company with such
information regarding the Registrable Shares and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
23.4 Sales by the Company. The Company shall not
effect any sale or distribution of securities of the Company during the period
from the date of filing of any registration statement filed pursuant to this
Section 23 through the 90th day following the earlier of (a) the date of sale
of all shares covered by such registration statement or (b) the expiration of
the Period of Availability of such registration statement, except as part of
such registration or to the extent otherwise permitted by this Agreement. If
the Company has previously filed a registration statement with respect to
Registrable Securities, and if such registration shall not have been withdrawn
or abandoned, the Company will not file or cause to be effected any other
registration of any of its securities under the Securities Act, whether on its
own behalf or at the request of any holder or holders of securities of the
Company, until a period of at least 180 days has elapsed from the earlier of
the sale of all Registrable Shares covered by the registration statement or the
termination of such registration statement.
23.5 Allocation of Expenses. Whenever the Company
is required by the provisions of this Section 23 to use its best efforts to
effect the registration of any shares
21
<PAGE> 22
of Common Stock under the Securities Act, the Company shall pay all
Registration Expenses in connection with any such registration. "Registration
Expenses" means all expenses incurred by the Company in complying with this
Section 23, including, without limitation, all registration and filing fees,
printing expenses, expenses of complying with state securities or blue sky
laws, fees and disbursements of separate counsel for the Company and
accountants' fees and expenses incident to or required by any such
registration. All fees and disbursements of separate counsel for the covered
shareholders and counsel for the underwriters and all other expenses of the
covered shareholders (including travel expenses) shall be borne by the covered
shareholders. The underwriting commissions or discounts shall be borne pro
rata by the sellers of Common Stock pursuant to such registration statement,
based on the number of shares of Common Stock offered by each such seller
(unless otherwise agreed by such sellers). Notwithstanding the foregoing, the
fees and disbursements of counsel for the underwriters in a public offering
pursuant to Section 23.2 in which the Company is selling securities shall be
borne by the Company. In the event that any covered shareholder requests any
special or interim audit of the financial statements of the Company, any of its
subsidiaries or affiliates or any other entity or person be conducted in order
that the financial statements to be contained in the registration statement
contemplated by Section 23.2 meet the requirements of Regulation S-X, such
covered shareholder shall reimburse the Company for the cost of any such
special or interim audit; provided, however, that if the Company shall then
have a class of securities registered under the Exchange Act, the Company shall
pay the costs of meeting the requirements of Regulation S-X in connection with
its regular year-end and quarterly financial statements.
23.6 Indemnification. In connection with any
registration of Registrable Shares pursuant to this Section 23:
(a) The Company agrees to indemnify and
hold harmless each covered shareholder and each underwriter (within the meaning
of the Securities Act) with respect to such shareholders' Registrable Shares,
and each person, if any, controlling (within the meaning of the Securities Act)
such covered shareholder or any such underwriter and each director or officer
of each of the foregoing, from and against any and all losses, claims, damages
or liabilities, joint or several, to which such covered shareholder, such
underwriter, controlling person, director or officer or any of them may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, or in any post-effective amendment
thereto, or in any preliminary prospectus or prospectus thereunder, or in any
supplement to any such prospectus, or arise out of or are based upon the
omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or
proceeding; provided, however, that (i) the Company shall not be liable to any
such covered shareholder or any such underwriter, controlling person, director
or officer in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission
22
<PAGE> 23
made in any of the foregoing documents in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such covered
shareholder or any underwriter with respect to the Registrable Shares, any
person controlling such covered shareholder or any such underwriter, as the
case may be, specifically for use in the preparation of any such documents, and
(ii) the Company shall not be liable to any such underwriter, controlling
person, director or officer, to the extent that such statement or omission was
contained in a preliminary prospectus and corrected in final or amended or
supplemented prospectus and such covered shareholder or any such underwriter
failed to deliver a copy of such final or amended or supplemented prospectus to
the person suing on the basis of such statement or omission within the time
required by the Securities Act; and provided, further, that the Company shall
not be required to indemnify any such underwriter unless such underwriter shall
have delivered to the Company its written agreement (i) to indemnify the
Company, each of its directors, each officer of the Company who shall have
signed such registration statement or any amendment thereto, each person named
in such registration statement or any amendment thereto as about to become a
director of the Company, and each person controlling the Company in a like
manner as that provided with respect to the Public Selling Shareholders in
Section 23.6(b) (insofar as any actual or alleged untrue statement or omission
is made in any of the foregoing documents in reliance upon and in conformity
with any information furnished in writing to the Company by or on behalf of
such underwriter expressly for use in the preparation of any such documents),
and (ii) to be bound by the provisions of Section 23.6(c).
(b) Each Public Selling Shareholder
hereby agrees to indemnify and hold harmless the Company, each of its
directors, each officer of the Company who shall sign any registration
statement under which Registrable Shares held by the Company are registered or
any amendment thereto, each person named in any such registration statement or
amendment as about to become a director of the Company, and each person
controlling (within the meaning of the Securities Act) the Company from and
against any and all losses, claims, damages or liabilities, joint or several,
to which the Company or any of them may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, or any post-effective amendment thereto or in any
preliminary prospectus or prospectus thereunder, or in any supplement to any
such prospectus, or arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent but only to the extent that such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such Public Selling Shareholder
expressly for use in the preparation of any of such documents, and agrees to
reimburse each such indemnified party for any legal or any other expenses
reasonably incurred by it in connection with the investigation or defending any
such loss, claim, damage, liability or proceeding; provided, however, that such
Public Selling Shareholder shall have no liability for any untrue statements or
omissions as to which such Public Selling Shareholder shall have timely
notified the Company in writing and the Company shall have thereafter failed to
correct in the final prospectus or a supplement to the prospectus.
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<PAGE> 24
(c) Promptly after receipt by an
indemnified party under Section 23.6(a) or 23.6(b) of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under either such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may have to any indemnified
party except to the extent the indemnifying party has been actually prejudiced
by such omission. In case any such action shall be brought against the
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein, and, to the extent that it shall wish, jointly with any other
indemnifying party, similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 23.6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If, for any reason, the
indemnification provided for in Section 23.6(a) and in Section 23.6(b) is not
available to the indemnified parties, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified party and
the indemnifying party, but also the relative fault of the indemnified party
and the indemnifying party, as well as any other relevant equitable
considerations.
23.7 Duration. Unless otherwise terminated
herein, Section 23 shall continue in effect for six years from the date hereof.
24. Status of Related Agreements.
24.1 Stockholders Voting Agreement. Ungar, L.
Donald Speer, II, and the Company each agree that the Stockholders Voting
Agreement is terminated, cancelled and rescinded as of the Stock Closing Date.
24.2 Option Agreement. Ungar, Woods, the Company,
and L. Donald Speer, II, each agree that the Option Agreement is terminated,
cancelled, and rescinded as of the Stock Closing Date, and that neither the
Company nor Mr. Speer have any further option to purchase shares of Common
Stock from either Ungar or Woods pursuant to the Option Agreement.
24.3 Irrevocable Proxy. Woods and L. Donald
Speer, II, hereby acknowledge and agree that the Irrevocable Proxy shall remain
in full force and effect with respect to all of the shares of Common Stock held
by Woods on and after the Execution Date and all shares of Common Stock
acquired by Woods after the Execution Date.
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<PAGE> 25
25. Inspection Right; GAAP Accounting. If the Company
fails to make any installment payment on the Ungar Promissory Note or the Woods
Promissory Note, any Conditional Future Payment or any Contingent Bonus
Payment, Ungar and/or Woods, as the case may be, shall have the right, after
reasonable notice and during normal business hours, on any date or dates up to
120 days after the close of the fiscal year in which the Company failed to make
the payment, to inspect and copy, acting only through a representative(s) of a
firm of certified public accountants licensed in California and engaged by
either Ungar and/or Woods, as the case may be, any of the Company's accounts,
books, and financial records and to obtain from the Company, promptly after
they become available, copies of the Company's Federal, state and local income
tax or information returns for the fiscal year in which the payment was not
made.
The Company shall maintain its books and records in accordance
with generally accepted accounting principles, including, but not limited to,
the calculation of its unreserved and unrestricted earned surplus and capital
surplus for purposes of Article VI of its Articles of Incorporation and its
assets and liabilities for purposes of Section 16-10a-640 of the Utah Act.
26. California Law. This Agreement has been negotiated
and executed in the State of California and is to be performed in San Diego
County, California. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, including all matters of
construction, validity, performance and enforcement, without giving effect to
principles of conflict of laws.
27. Attorneys' Fees. In any action, litigation or
proceeding between the parties arising out of or in relation to this Agreement,
the prevailing party in such action will be awarded, in addition to any
damages, injunctions or other relief, and without regard to whether or not such
matter is prosecuted to final judgment, such party's costs and expenses,
including reasonable attorneys' fees. Such award will include post-judgment
attorneys' fees and costs, which will not be deemed as merged into the final
judgment.
28. Non-Admission of Liability. The parties understand
and agree that neither the payment of any sum of money nor the execution of
this Agreement by the parties will constitute or be construed as an admission
of any liability whatsoever by any party.
29. Withholding Taxes; Tax Reporting. The Company may,
if required in its reasonable judgment, withhold from any amounts payable under
this Agreement all such Federal, state, city and other taxes, and may file with
appropriate governmental authorities all such information returns or other
reports with respect to the tax consequences attendant to any amounts payable
under this Agreement, as may, in its reasonable judgment, be required by law.
30. Severability. If any one or more of the provisions
contained herein (or parts thereof), or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof will not be in any
25
<PAGE> 26
way impaired or affected, it being intended that all of the rights and
privileges shall be enforceable to the fullest extent permitted by law.
31. Entire Agreement. This Agreement represents the sole
and entire agreement between the parties and, except as expressly stated
herein, supersedes all prior agreements, negotiations and discussions between
Ungar, Woods, and the Company with respect to the subject matters contained
herein.
32. Waiver. No waiver by any party hereto at any time of
any breach of, or compliance with, any condition or provision of this Agreement
to be performed by any other party hereto may be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.
33. Amendment. This Agreement may be modified or amended
only if such modification or amendment is agreed to in writing and signed by
duly authorized representatives of the parties hereto, which writing expressly
states the intent of the parties to modify this Agreement. Notwithstanding
anything herein to the contrary, the Company and Ungar and the Company and
Woods each may enter into separate amendments to this Agreement with respect to
their individual payment provisions herein provided that the other party's
payment provisions are not adversely affected.
34. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed to be an original as against
any party that has signed it, but all of which together will constitute one and
the same instrument.
35. Assignment. This Agreement inures to the benefit of
and is binding upon the Company, Ungar and Woods, and their respective heirs,
successors and assigns. The rights of Ungar and Woods under this Agreement
shall not be assignable by such party hereto (other than by operation of law or
death) without the written consent of the Company, which consent may be
withheld in its sole discretion. The Company shall not consider a request for
assignment unless Ungar and/or Woods, as the case may be, satisfies in the
opinion of the Company and its legal counsel all of the conditions of transfer
set forth in Sections 6(i) and (j) for Ungar and Sections 7(k) and (m) for
Woods. Any assignment made or purported to be made contrary to the provisions
of this Section 35 shall be void and of no force or effect.
36. Notice. Any notice or other communication hereunder
must be given in writing and either (i) delivered in person; (ii) transmitted
by telex, telefax or telecommunications mechanism, provided that any notice so
given is also mailed as provided in clause (iii) or (iii); mailed by first
class mail, postage prepaid, as follows:
26
<PAGE> 27
If to the Company:
Inland Casino Corporation
4225 Executive Square, Suite 1650
La Jolla, California 92037
Attn: Arthur R. Pfizenmayer
Facsimile No. (619) 546-9373
If to Ungar:
Jonathan Ungar
2243 North Point
San Francisco, California 94123
If to Woods:
Alan Henry Woods
55 Baker Parade
Ashburton
Melbourne VIC
Australia
Facsimile No. 011 852 2572 6258
or such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (iv) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 36 and an appropriate answer-back (e.g., confirmation) is received; (v)
if given by mail, three (3) days after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid; or (vi) if
given by any other means, when actually delivered at such address.
37. Miscellaneous Provisions.
(a) The parties represent that they have read
this Agreement and fully understand all of its terms; that they have conferred
with their respective attorneys about this Agreement, or have knowingly and
voluntarily chosen not to confer with their attorneys about this Agreement;
that they have executed this Agreement without coercion or duress of any kind;
and that they understand any rights that they have or may have and sign this
Agreement with full knowledge of any such rights.
(b) The language in all parts of this Agreement
must be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Whenever the context requires, all words
used in the singular must be construed to have been used in the plural, and
vice versa, and each gender must include any other gender. The captions of the
Sections of this Agreement are for convenience only and must not affect the
construction or interpretation of any of the provision herein.
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<PAGE> 28
(c) All rights, remedies, undertakings,
obligations, options, covenants, conditions and agreements contained in this
Agreement are cumulative and no one of them is exclusive of any other. Time is
of the essence in the performance of this Agreement.
(d) Each party acknowledges that no
representation, statement or promise made by any other party, or by the agent
or attorney of any other party, has been relied on by any party in entering
into this Agreement.
(e) Each party understands that the facts with
respect to which this Agreement is entered into may be materially different
from those the parties now believe to be true. Each party accepts and assumes
this risk and agrees that this Agreement and the release in it shall remain in
full force and effect, and legally binding, notwithstanding the discovery or
existence of any additional or different facts, or of any claims with respect
to those facts.
(f) Unless expressly set forth otherwise, all
references herein to a "day" are deemed to be a reference to a calendar day.
All references to "business day" mean any day of the year other than a
Saturday, Sunday or a public or bank holiday in San Diego, California. Unless
expressly stated otherwise, cross-references herein refer to provisions within
this Agreement and are not references to the overall transaction or to any
other document.
(g) Each party to this Agreement will cooperate
fully in the execution of any and all other documents and in the completion of
any additional actions that may be necessary or appropriate to give full force
and effect to the terms and intent of this Agreement.
38. Approval of Board of Directors. This Agreement was
approved by the Company's Board of Directors at a special meeting held on
September 16, 1996.
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<PAGE> 29
THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT,
UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT. EACH OF UNGAR AND WOODS
ACKNOWLEDGES AND UNDERSTANDS THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the dates indicated below.
INLAND CASINO CORPORATION
By: /s/ L. DONALD SPEER, II
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By: /s/ ARTHUR R. PFIZENMAYER
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
By: /s/ DUANE M. EBERLEIN
-----------------------------------
Duane M. Eberlein
Vice-President and Chief
Financial Officer
/s/ L. DONALD SPEER, II
-----------------------------------
L. Donald Speer, II
/s/ JONATHAN UNGAR
-----------------------------------
Jonathan Ungar
/s/ ALAN HENRY WOODS
-----------------------------------
Alan Henry Woods
29
<PAGE> 30
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
PROMISSORY NOTE
$1,768,550.00 La Jolla, California September 30, 1996
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Jonathan Ungar,
an individual resident of the State of California ("Payee"), the principal sum
of ONE MILLION SEVEN HUNDRED SIXTY EIGHT THOUSAND FIVE HUNDRED FIFTY DOLLARS
($1,768,550.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10.0%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
30, 1997, interest only on the unpaid principal balance; thereafter,
commencing on September 30, 2000, Maker shall pay to the order of Payee the
principal sum of $1,768,550 in three annual installments in the following
manner: $589,516.66 on each of September 30, 2000, 2001 and 2002, with
interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable law, in each case after giving effect to payments to be made
by Maker under that certain Stock Purchase and Settlement and Release
Agreement, dated February 23, 1996, by and between Maker and Jack R. Smith; and
provided further, that in assessing whether Maker shall be
EXHIBIT "A"
<PAGE> 31
obligated to make an installment payment under this Promissory Note, Maker
shall only be obligated to make such payment to Payee to the extent that it
could make the corresponding payment to Alan Henry Woods under the Woods
Promissory Note made pursuant to the Stock Purchase and Settlement and Release
Agreement, dated September 27, 1996, by and among Maker, Payee, and Alan
Henry Woods (the "Stock Purchase Agreement"). Each of the above-referenced
financial tests shall be made immediately prior to the time an installment
payment is scheduled. To the extent such financial tests are not met, Maker
shall be under no obligation to make such payment and Maker shall not be deemed
to be in default on this Promissory Note. To the extent that any such
installment comes due on a day that is not a business day, such payment shall
be due on the next succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Woods and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Woods
to the extent legally permissible; thereafter, the amount of such scheduled
installment which the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Woods' notes are paid in
full which may extend beyond the anticipated six-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Woods Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
2
<PAGE> 32
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 33
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-------------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-------------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 34
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), ALAN HENRY WOODS AND JONATHAN UNGAR
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS
THIS PROMISSORY NOTE IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS
INLAND HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW IS NOT REQUIRED.
PROMISSORY NOTE
$1,731,450.00 La Jolla, California September 30, 1996
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Alan Henry Woods,
an individual citizen of Australia and a resident of Hong Kong ("Payee"), the
principal sum of ONE MILLION SEVEN HUNDRED THIRTY ONE THOUSAND FOUR HUNDRED
FIFTY DOLLARS ($1,731,450.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10.0%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
30, 1997, interest only on the unpaid principal balance; thereafter,
commencing on September 30, 2000, Maker shall pay to the order of Payee the
principal sum of $1,731,450 in three annual installments in the following
manner: $577,150 on each of September 30, 2000, 2001 and 2002, with interest
on the unpaid principal balance as specified in Section 1 hereof payable with
each installment of principal; provided, however, that Maker only shall be
obligated to make an installment payment under this Promissory Note (a) to the
extent of Maker's unreserved and unrestricted earned surplus and capital
surplus as provided in Article VI of Maker's Articles of Incorporation, and (b)
if and to the extent that such installment payment could be made under Section
16-10a-640 of the Utah Revised Business Corporation Act or any other similar
applicable
EXHIBIT "B"
<PAGE> 35
law, in each case after giving effect to payments to be made by Maker under
that certain Stock Purchase and Settlement and Release Agreement, dated
February 23, 1996, by and between Maker and Jack R. Smith; and provided
further, that in assessing whether Maker shall be obligated to make an
installment payment under this Promissory Note, Maker shall only be obligated
to make such payment to Payee to the extent that it could make the
corresponding payment to Jonathan Ungar under the Ungar Promissory Note made
pursuant to the Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Maker, Payee, and Jonathan Ungar (the "Stock
Purchase Agreement"). Each of the above- referenced financial tests shall be
made immediately prior to the time an installment payment is scheduled. To the
extent such financial tests are not met, Maker shall be under no obligation to
make such payment and Maker shall not be deemed to be in default on this
Promissory Note. To the extent that any such installment comes due on a day
that is not a business day, such payment shall be due on the next succeeding
business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Ungar and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Ungar
to the extent legally permissible; thereafter, the amount of such scheduled
installment which the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Ungar's notes are paid in
full which may extend beyond the anticipated six-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Ungar Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
2
<PAGE> 36
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 37
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 38
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
PROMISSORY NOTE
$1,000,000.00 La Jolla, California September ___, _____
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Jonathan Ungar,
an individual resident of the State of California ("Payee"), the principal sum
of ONE MILLION DOLLARS ($1,000,000.00) in lawful money of the United States of
America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10%) per annum, computed on the basis of a 360-day year for the actual
number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
__, _______, interest only on the unpaid principal balance; thereafter,
commencing on September __, ______, Maker shall pay to the order of Payee the
principal sum of $1,000,000 in three annual installments in the following
manner: $333,333.33 on each of September ___, _______, _______ and _______,
with interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable law, in each case after giving effect to payments to be made
by Maker under that certain Stock Purchase and Settlement and Release
Agreement, dated February 23, 1996, by and between Maker and Jack R. Smith, and
after giving effect to payments to be made by Maker to Payee pursuant to the
Ungar Promissory Note and to Woods pursuant to the Woods Promissory Note,
EXHIBIT "C-1"
<PAGE> 39
each made pursuant to the Stock Purchase and Settlement and Release Agreement,
dated September 27, 1996, by and among Maker, Payee, and Alan Henry Woods
(the "Stock Purchase Agreement"); and provided further, that in assessing
whether Maker shall be obligated to make an installment payment under this
Promissory Note, Maker shall only be obligated to make such payment to Payee to
the extent that it could make the corresponding payment to Alan Henry Woods
under the Conditional Promissory Notes executed in favor of Mr. Woods pursuant
to the Stock Purchase Agreement. Each of the above-referenced financial tests
shall be made immediately prior to the time an installment payment is
scheduled. To the extent such financial tests are not met, Maker shall be
under no obligation to make such payment and Maker shall not be deemed to be in
default on this Promissory Note. To the extent that any such installment comes
due on a day that is not a business day, such payment shall be due on the next
succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Woods and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Woods
to the extent legally permissible; thereafter, the amount of such scheduled
installment that the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Woods' notes are paid in
full, which may extend beyond the anticipated six-year term stated in Section
2 herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Woods Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
2
<PAGE> 40
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 41
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 42
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS
THIS PROMISSORY NOTE IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS
INLAND HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW IS NOT REQUIRED.
PROMISSORY NOTE
$1,000,000.00 La Jolla, California September ___, _____
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Alan Henry Woods,
an individual citizen of Australia and a resident of Hong Kong ("Payee"), the
principal sum of ONE MILLION DOLLARS ($1,000,000.00) in lawful money of the
United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10%) per annum, computed on the basis of a 360-day year for the actual
number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
__, _______, interest only on the unpaid principal balance; thereafter,
commencing on September __, ______, Maker shall pay to the order of Payee the
principal sum of $1,000,000 in three annual installments in the following
manner: $333,333.33 on each of September ___, _______, _______ and _______,
with interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable law, in each case after giving effect to payments to be made
by Maker under that certain Stock
EXHIBIT "C-2"
<PAGE> 43
Purchase and Settlement and Release Agreement, dated February 23, 1996, by and
between Maker and Jack R. Smith, and after giving effect to payments to be made
by Maker to Payee pursuant to the Woods Promissory Note and to Ungar pursuant
to the Ungar Promissory Note, each made pursuant to the Stock Purchase and
Settlement and Release Agreement, dated September 27, 1996, by and among
Maker, Payee, and Jonathan Ungar (the "Stock Purchase Agreement"); and provided
further, that in assessing whether Maker shall be obligated to make an
installment payment under this Promissory Note, Maker shall only be obligated
to make such payment to Payee to the extent that it could make the
corresponding payment to Jonathan Ungar under the Conditional Promissory Notes
executed in favor of Mr. Ungar pursuant to the Stock Purchase Agreement. Each
of the above-referenced financial tests shall be made immediately prior to the
time an installment payment is scheduled. To the extent such financial tests
are not met, Maker shall be under no obligation to make such payment and Maker
shall not be deemed to be in default on this Promissory Note. To the extent
that any such installment comes due on a day that is not a business day, such
payment shall be due on the next succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Ungar and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Ungar
to the extent legally permissible; thereafter, the amount of such scheduled
installment that the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Ungar's notes are paid in
full, which may extend beyond the anticipated six-year term stated in Section
2 herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Ungar Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
2
<PAGE> 44
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 45
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 46
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
PROMISSORY NOTE
$981,276.00 La Jolla, California September ___, _____
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Jonathan Ungar,
an individual resident of the State of California ("Payee"), the principal sum
of NINE HUNDRED EIGHTY ONE THOUSAND TWO HUNDRED SEVENTY SIX DOLLARS
($981,276.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10%) per annum, computed on the basis of a 360-day year for the actual
number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
__, _______, interest only on the unpaid principal balance; thereafter,
commencing on September __, ______, Maker shall pay to the order of Payee the
principal sum of $981,276.00 in three annual installments in the following
manner: $327,092.00 on each of September ___, _______, ______and _______, with
interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable law, in each case after giving effect to payments to be made
by Maker under that certain Stock Purchase and Settlement and Release
Agreement, dated February 23, 1996, by and between Maker and Jack R. Smith, and
after giving effect to payments to be made by Maker to Payee
EXHIBIT "D-1"
<PAGE> 47
pursuant to the Ungar Promissory Note and to Woods pursuant to the Woods
Promissory Note, each made pursuant to the Stock Purchase and Settlement and
Release Agreement, dated September 27, 1996, by and among Maker, Payee, and
Alan Henry Woods (the "Stock Purchase Agreement"); and provided further, that
in assessing whether Maker shall be obligated to make an installment payment
under this Promissory Note, Maker shall only be obligated to make such payment
to Payee to the extent that it could make the corresponding payment to Alan
Henry Woods under the Conditional Promissory Notes executed in favor of Mr.
Woods pursuant to the Stock Purchase Agreement. Each of the above-referenced
financial tests shall be made immediately prior to the time an installment
payment is scheduled. To the extent such financial tests are not met, Maker
shall be under no obligation to make such payment and Maker shall not be deemed
to be in default on this Promissory Note. To the extent that any such
installment comes due on a day that is not a business day, such payment shall
be due on the next succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Woods and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Woods
to the extent legally permissible; thereafter, the amount of such scheduled
installment that the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Woods' notes are paid in
full, which may extend beyond the anticipated six-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Woods Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
2
<PAGE> 48
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 49
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 50
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS
THIS PROMISSORY NOTE IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS
INLAND HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW IS NOT REQUIRED.
PROMISSORY NOTE
$875,212.00 La Jolla, California September ___, _____
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Alan Henry Woods,
an individual citizen of Australia and a resident of Hong Kong ("Payee"), the
principal sum of EIGHT HUNDRED SEVENTY FIVE THOUSAND TWO HUNDRED TWELVE DOLLARS
($875,212.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10%) per annum, computed on the basis of a 360-day year for the actual
number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
__, _______, interest only on the unpaid principal balance; thereafter,
commencing on September __, ______, Maker shall pay to the order of Payee the
principal sum of $875,212.00 in three annual installments in the following
manner: $291,737.33 on each of September ___, _______, _______ and _______,
with interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable
EXHIBIT "D-2"
<PAGE> 51
law, in each case after giving effect to payments to be made by Maker under
that certain Stock Purchase and Settlement and Release Agreement, dated
February 23, 1996, by and between Maker and Jack R. Smith, and after giving
effect to payments to be made by Maker to Payee pursuant to the Woods
Promissory Note and to Ungar pursuant to the Ungar Promissory Note, each made
pursuant to the Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Maker, Payee, and Jonathan Ungar (the "Stock
Purchase Agreement"); and provided further, that in assessing whether Maker
shall be obligated to make an installment payment under this Promissory Note,
Maker shall only be obligated to make such payment to Payee to the extent that
it could make the corresponding payment to Jonathan Ungar under the Conditional
Promissory Notes executed in favor of Mr. Ungar pursuant to the Stock Purchase
Agreement. Each of the above-referenced financial tests shall be made
immediately prior to the time an installment payment is scheduled. To the
extent such financial tests are not met, Maker shall be under no obligation to
make such payment and Maker shall not be deemed to be in default on this
Promissory Note. To the extent that any such installment comes due on a day
that is not a business day, such payment shall be due on the next succeeding
business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Ungar and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Ungar
to the extent legally permissible; thereafter, the amount of such scheduled
installment that the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Ungar's notes are paid in
full, which may extend beyond the anticipated six-year term stated in Section
2 herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Ungar Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
2
<PAGE> 52
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 53
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 54
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
PROMISSORY NOTE
$1,515,000.00 La Jolla, California _______ ___, ______
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Jonathan Ungar,
an individual resident of the State of California ("Payee"), the principal sum
of ONE MILLION FIVE HUNDRED FIFTEEN THOUSAND DOLLARS ($1,515,000.00) in lawful
money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of _____
percent (_____%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on ______
__, ____, interest only on the unpaid principal balance; thereafter, commencing
on ______ __, ____, Maker shall pay to the order of Payee the principal sum of
$1,515,000 in two annual installments in the following manner: $757,500 on
each of ______ ___, ____ and ____, with interest on the unpaid principal
balance as specified in Section 1 hereof payable with each installment of
principal; provided, however, that Maker only shall be obligated to make an
installment payment under this Promissory Note (a) to the extent of Maker's
unreserved and unrestricted earned surplus and capital surplus as provided in
Article VI of Maker's Articles of Incorporation, and (b) if and to the extent
that such installment payment could be made under Section 16-10a-640 of the
Utah Revised Business Corporation Act or any other similar applicable law, in
each case after giving effect to payments to be made by Maker under that
certain Stock Purchase and Settlement and Release Agreement, dated February 23,
1996, by and between Maker and Jack R. Smith, and after giving effect to
payments to be made by Maker to Payee pursuant to the Ungar Promissory Note and
the
EXHIBIT "E-1"
<PAGE> 55
Conditional Promissory Notes executed in favor of Payee and to Woods pursuant to
the Woods Promissory Note and the Conditional Promissory Notes executed in favor
of Woods, each note made pursuant to the Stock Purchase and Settlement and
Release Agreement, dated September 27, 1996, by and among Maker, Payee, and Alan
Henry Wood (the "Stock Purchase Agreement"); and provided further, that in
assessing whether Maker shall be obligated to make an installment payment under
this Promissory Note, Maker shall only be obligated to make such payment to
Payee to the extent that it could make the corresponding payment to Alan Henry
Woods under the Contingent Promissory Note executed in favor of Mr. Woods
pursuant to the Stock Purchase the Stock Purchase Agreement. Each of the
above-referenced financial tests shall be made immediately prior to the time an
installment payment is scheduled. To the extent such financial tests are not
met, Maker shall be under no obligation to make such payment and Maker shall not
be deemed to be in default on this Promissory Note. To the extent that any such
installment comes due on a day that is not a business day, such payment shall be
due on the next succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Woods and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Woods
to the extent legally permissible; thereafter, the amount of such scheduled
installment which the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Woods' notes are paid in
full which may extend beyond the anticipated five-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Woods Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
2
<PAGE> 56
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 57
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 58
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS
THIS PROMISSORY NOTE IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS
INLAND HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW IS NOT REQUIRED.
PROMISSORY NOTE
$1,485,000.00 La Jolla, California _______ ___, ______
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Alan Henry Woods,
an individual citizen of Australia and a resident of Hong Kong ("Payee"), the
principal sum of ONE MILLION FOUR HUNDRED EIGHTY FIVE THOUSAND DOLLARS
($1,485,000.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of _____
percent (_____%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on ______
__, ____, interest only on the unpaid principal balance; thereafter, commencing
on ______ __, ____, Maker shall pay to the order of Payee the principal sum of
$1,485,000 in two annual installments in the following manner: $742,500 on
each of ______ ___, ____ and ____, with interest on the unpaid principal
balance as specified in Section 1 hereof payable with each installment of
principal; provided, however, that Maker only shall be obligated to make an
installment payment under this Promissory Note (a) to the extent of Maker's
unreserved and unrestricted earned surplus and capital surplus as provided in
Article VI of Maker's Articles of Incorporation, and (b) if and to the extent
that such installment payment could be made under Section 16-10a-640 of the
Utah Revised Business Corporation Act or any other similar applicable law, in
each case after giving effect to payments
EXHIBIT "E-2"
<PAGE> 59
to be made by Maker under that certain Stock Purchase and Settlement and
Release Agreement, dated February 23, 1996, by and between Maker and Jack R.
Smith, and after giving effect to payments to be made by Maker to Payee
pursuant to the Woods Promissory Note and the Conditional Promissory Notes
executed in favor of Payee and to Ungar pursuant to the Ungar Promissory Note
and the Conditional Promissory Notes executed in favor of Ungar, each note made
pursuant to the Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Maker, Payee, and Jonathan Ungar (the "Stock
Purchase Agreement"); and provided further, that in assessing whether Maker
shall be obligated to make an installment payment under this Promissory Note,
Maker shall only be obligated to make such payment to Payee to the extent that
it could make the corresponding payment to Jonathan Ungar under the Contingent
Promissory Note executed in favor of Mr. Ungar pursuant to the Stock Purchase
the Stock Purchase Agreement. Each of the above-referenced financial tests
shall be made immediately prior to the time an installment payment is
scheduled. To the extent such financial tests are not met, Maker shall be
under no obligation to make such payment and Maker shall not be deemed to be in
default on this Promissory Note. To the extent that any such installment comes
due on a day that is not a business day, such payment shall be due on the next
succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein, Maker
shall assess the amount of funds that it may legally use to make payments to
Payee and Mr. Ungar and, to the extent that there are funds available, Maker
shall first make equal payments of principal and/or interest thereon (depending
upon the type of payment that was scheduled) to Payee and Mr. Ungar to the
extent legally permissible; thereafter, the amount of such scheduled installment
which the Company was not obligated to pay pursuant to Section 2 hereof shall be
added to the principal amount remaining on this Promissory Note and future
annual payments hereunder will be adjusted accordingly. Such procedures shall
apply to successive years' installment payments until the entire principal
amount of each of Payee's and Mr. Ungar's notes are paid in full which may
extend beyond the anticipated five-year term stated in Section 2 herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Ungar Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
2
<PAGE> 60
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 61
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By:
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 62
"U.S. PERSON" MEANS:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) any estate of which any executor or administrator is a U.S.
person;
(v) any agency or branch of a foreign entity located in the United
States:
(vi) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or account
of a U.S. person;
(vii) any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign
jurisdiction; and
(B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act of 1993, as
amended (the "Act"), unless it is organized or incorporated and owned by
accredited investors (as defined in Rule 501(a) under the Act) who are not
natural persons, estates or trusts.
EXHIBIT "F"
<PAGE> 1
EXHIBIT 2.2
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), JONATHAN UNGAR AND ALAN HENRY WOODS
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW. ACCORDINGLY, THIS PROMISSORY NOTE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNLESS IT HAS FIRST BEEN
REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAW OR UNLESS INLAND HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT THAT REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED.
PROMISSORY NOTE
$1,768,550.00 La Jolla, California September 30, 1996
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Jonathan Ungar,
an individual resident of the State of California ("Payee"), the principal sum
of ONE MILLION SEVEN HUNDRED SIXTY EIGHT THOUSAND FIVE HUNDRED FIFTY DOLLARS
($1,768,550.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10.0%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
30, 1997, interest only on the unpaid principal balance; thereafter,
commencing on September 30, 2000, Maker shall pay to the order of Payee the
principal sum of $1,768,550 in three annual installments in the following
manner: $589,516.66 on each of September 30, 2000, 2001 and 2002, with
interest on the unpaid principal balance as specified in Section 1 hereof
payable with each installment of principal; provided, however, that Maker only
shall be obligated to make an installment payment under this Promissory Note
(a) to the extent of Maker's unreserved and unrestricted earned surplus and
capital surplus as provided in Article VI of Maker's Articles of Incorporation,
and (b) if and to the extent that such installment payment could be made under
Section 16-10a-640 of the Utah Revised Business Corporation Act or any other
similar applicable law, in each case after giving effect to payments to be made
by Maker under that certain Stock Purchase and Settlement and Release
Agreement, dated February 23, 1996, by and between Maker and Jack R. Smith; and
provided further, that in assessing whether Maker shall be
1
<PAGE> 2
obligated to make an installment payment under this Promissory Note, Maker
shall only be obligated to make such payment to Payee to the extent that it
could make the corresponding payment to Alan Henry Woods under the Woods
Promissory Note made pursuant to the Stock Purchase and Settlement and Release
Agreement, dated September 27, 1996, by and among Maker, Payee, and Alan
Henry Woods (the "Stock Purchase Agreement"). Each of the above-referenced
financial tests shall be made immediately prior to the time an installment
payment is scheduled. To the extent such financial tests are not met, Maker
shall be under no obligation to make such payment and Maker shall not be deemed
to be in default on this Promissory Note. To the extent that any such
installment comes due on a day that is not a business day, such payment shall
be due on the next succeeding business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Woods and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Woods
to the extent legally permissible; thereafter, the amount of such scheduled
installment which the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Woods' notes are paid in
full which may extend beyond the anticipated six-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Woods Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
2
<PAGE> 3
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 4
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By: /s/ L. DONALD SPEER, II
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By: /s/ ARTHUR R. PFIZENMAYER
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
<PAGE> 1
EXHIBIT 2.3
THIS PROMISSORY NOTE HAS BEEN ISSUED IN CONNECTION WITH A CERTAIN STOCK
PURCHASE AND SETTLEMENT AND RELEASE AGREEMENT DATED SEPTEMBER 27, 1996 BY AND
AMONG INLAND CASINO CORPORATION ("INLAND"), ALAN HENRY WOODS AND JONATHAN UNGAR
(COPIES OF WHICH ARE ON FILE WITH INLAND AND MAY BE OBTAINED FROM THE CORPORATE
SECRETARY OF INLAND) AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS
THIS PROMISSORY NOTE IS REGISTERED UNDER THE SECURITIES ACT. ACCORDINGLY, THIS
PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNLESS IT HAS FIRST BEEN REGISTERED UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW OR UNLESS
INLAND HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER ANY APPLICABLE
STATE SECURITIES LAW IS NOT REQUIRED.
PROMISSORY NOTE
$1,731,450.00 La Jolla, California September 30, 1996
FOR VALUE RECEIVED, the undersigned, Inland Casino Corporation, a Utah
corporation ("Maker"), hereby promises to pay to the order of Alan Henry Woods,
an individual citizen of Australia and a resident of Hong Kong ("Payee"), the
principal sum of ONE MILLION SEVEN HUNDRED THIRTY ONE THOUSAND FOUR HUNDRED
FIFTY DOLLARS ($1,731,450.00) in lawful money of the United States of America.
1. Interest. The unpaid principal balance of this Promissory
Note from time to time outstanding shall bear interest at the rate of ten
percent (10.0%) per annum, computed on the basis of a 360-day year for the
actual number of days elapsed.
2. Payments. For the first three (3) years of this Promissory
Note, Maker shall pay to Payee, in annual installments commencing on September
30, 1997, interest only on the unpaid principal balance; thereafter,
commencing on September 30, 2000, Maker shall pay to the order of Payee the
principal sum of $1,731,450 in three annual installments in the following
manner: $577,150 on each of September 30, 2000, 2001 and 2002, with interest
on the unpaid principal balance as specified in Section 1 hereof payable with
each installment of principal; provided, however, that Maker only shall be
obligated to make an installment payment under this Promissory Note (a) to the
extent of Maker's unreserved and unrestricted earned surplus and capital
surplus as provided in Article VI of Maker's Articles of Incorporation, and (b)
if and to the extent that such installment payment could be made under Section
16-10a-640 of the Utah Revised Business Corporation Act or any other similar
applicable
1
<PAGE> 2
law, in each case after giving effect to payments to be made by Maker under
that certain Stock Purchase and Settlement and Release Agreement, dated
February 23, 1996, by and between Maker and Jack R. Smith; and provided
further, that in assessing whether Maker shall be obligated to make an
installment payment under this Promissory Note, Maker shall only be obligated
to make such payment to Payee to the extent that it could make the
corresponding payment to Jonathan Ungar under the Ungar Promissory Note made
pursuant to the Stock Purchase and Settlement and Release Agreement, dated
September 27, 1996, by and among Maker, Payee, and Jonathan Ungar (the "Stock
Purchase Agreement"). Each of the above-referenced financial tests shall be
made immediately prior to the time an installment payment is scheduled. To the
extent such financial tests are not met, Maker shall be under no obligation to
make such payment and Maker shall not be deemed to be in default on this
Promissory Note. To the extent that any such installment comes due on a day
that is not a business day, such payment shall be due on the next succeeding
business day.
3. Adjusted Payments. Notwithstanding anything to the contrary
herein, to the extent that Maker is unable to make an installment payment under
this Promissory Note because of the reasons set forth in Section 2 herein,
Maker shall assess the amount of funds that it may legally use to make payments
to Payee and Mr. Ungar and, to the extent that there are funds available, Maker
shall first make proportional payments of principal and/or interest thereon
(depending upon the type of payment that was scheduled) to Payee and Mr. Ungar
to the extent legally permissible; thereafter, the amount of such scheduled
installment which the Company was not obligated to pay pursuant to Section 2
hereof shall be added to the principal amount remaining on this Promissory Note
and future annual payments hereunder will be adjusted accordingly. Such
procedures shall apply to successive years' installment payments until the
entire principal amount of each of Payee's and Mr. Ungar's notes are paid in
full which may extend beyond the anticipated six-year term stated in Section 2
herein.
4. Prepayment of Principal.
(a) Any portion of the principal balance of this
Promissory Note may be repaid from time to time in whole or in part, without
penalty, and the amount of the payments of principal and interest set forth in
Section 2 will be adjusted accordingly; provided, however, that all payments
and prepayments made by the Company under this Promissory Note and the
corresponding Ungar Promissory Note shall be proportionate with respect to
each such Note.
(b) If the principal balance of this Promissory Note is
paid in full prior to the final installment date, the entire principal balance
of this Promissory Note will be reduced by an amount equal to two percent (2%)
for each full twelve-month period that the principal balance is paid in full
prior to the final installment date. Such reduction of principal shall not
reduce any interest payments made on this Promissory Note. The amount of such
principal reduction shall be deducted from the final installment payment to be
paid by Maker.
5. Default. If Maker fails to make any installment payment or
portion of a payment when due, and such failure shall continue thirty (30) days
after Maker has received written notice of the default from Payee, all unpaid
principal, together with accrued interest, will become immediately due and
payable at the Option of the Payee. Notwithstanding anything to the contrary
herein, this Promissory Note will not be in default to the extent Maker is not
2
<PAGE> 3
obligated to make an installment payment of principal and/or interest hereunder
for the reasons set forth in Section 2 herein.
6. This Promissory Note is made pursuant to the Stock Purchase
Agreement. Nothing in this Promissory Note shall be construed in a manner
which is inconsistent with the terms of the Stock Purchase Agreement.
7. Limitation on Interest. Notwithstanding any provision
contained in this Promissory Note to the contrary, no holder hereof shall ever
be entitled to receive, collect, or apply as interest on this Promissory Note
any amount in excess of the highest lawful rate permissible under any law that
a court of competent jurisdiction may deem applicable hereto. If any holder
hereof ever receives, collects, or applies as interest any such excess, the
amount that would be excessive interest shall be deemed to be a partial payment
of principal and treated hereunder as such, and, if the principal balance of
this Promissory Note is paid in full, any remaining excess shall promptly be
paid to Maker.
8. Right of Setoff. To the extent that Payee does not meet his
obligations set forth in Section 19 of the Stock Purchase Agreement, Maker, at
its sole election, may reduce the principal amount of this Promissory Note by
the amount of payments not made by Payee pursuant to Section 19 of the Stock
Purchase Agreement. Such right of setoff shall be separate from any other
rights available to the Company and shall not effect any right that any
individual director may have against Payee.
9. Successors and Assigns. This Promissory Note shall be binding
upon Maker, its successors and assigns, and shall inure to the benefit of
Payee, its successors and assigns. Notwithstanding anything to the contrary
herein, this Promissory Note shall not be assigned by Payee without the written
consent of Maker in accordance with the provisions of Section 35 of the Stock
Purchase Agreement.
10. Severability. If any one or more of the provisions contained
herein (or parts thereof), or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in every other respect and of
the remaining provisions hereof will not be in any way impaired or affected, it
being intended that all of the rights and privileges should be enforceable to
the fullest extent permitted by law.
11. Business Day. For purposes of this Promissory Note, the term
"business day" shall mean any day of the year other than a Saturday, Sunday or
public or bank holiday in San Diego, California.
3
<PAGE> 4
12. APPLICABLE LAW. THIS PROMISSORY NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
date first set forth above.
INLAND CASINO CORPORATION
By: /s/ L. DONALD SPEER, II
-----------------------------------
L. Donald Speer, II
Chairman of the Board and
Chief Executive Officer
By: /s/ ARTHUR R. PFIZENMAYER
-----------------------------------
Arthur R. Pfizenmayer
President and Chief
Operating Officer
4
