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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"), XXXXXXXX XXXXX AND XXXX XXXXX XXXXX
(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 Xxxxxxxx Xxxxx,
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 Xxxx X. Xxxxx; and
provided further, that in assessing whether Maker shall be
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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 Xxxx Xxxxx Xxxxx under the Xxxxx
Promissory Note made pursuant to the Stock Purchase and Settlement and Release
Agreement, dated September 27, 1996, by and among Maker, Payee, and Xxxx
Xxxxx Xxxxx (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 Xx. Xxxxx 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 Xx. Xxxxx
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 Xx. Xxxxx' 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 Xxxxx 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.
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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.
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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. XXXXXX XXXXX, XX
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L. Xxxxxx Xxxxx, XX
Chairman of the Board and
Chief Executive Officer
By: /s/ XXXXXX X. XXXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxxx
President and Chief
Operating Officer
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