THIS WARRANT

 

                                                                EXHIBIT 10.4

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER 
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR 
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT 
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE 
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

                        WARRANT TO PURCHASE STOCK

Corporation: Inland Casino Corporation, a Utah corporation
Number of Shares: 40,000
Class of Stock: Common
Initial Exercise Price: $5.00 per share
Issue Date: October 10, 1995
Expiration Date: October 10, 2000 (subject to Article 4.1)

        THIS WARRANT CERTIFIES THAT, in consideration of an extension of credit 
to Corporation and for other good and valuable consideration, IMPERIAL BANK 
("Holder") is entitled to purchase the number of fully paid and nonassessable 
shares of the class of securities (the "Shares") of the corporation (the 
"Company") at the initial exercise price per Share (the "Warrant Price") all as 
set forth above and as adjusted pursuant to Article 2 of this Warrant, subject 
to the provisions and upon the terms and conditions set forth in this Warrant.

ARTICLE 1. EXERCISE

        1.1  Method of Exercise. Holder may exercise this Warrant by delivering 
this Warrant and a duly executed Notice of Exercise in substantially the form 
attached as Appendix 1 to the principal office of the Company. Unless Holder is 
exercising the conversion right set forth in Section 1.2, Holder shall also 
deliver to the Company a check for the aggregate Warrant Price for the Shares 
being purchased.

        1.2  Conversion Right. In lieu of exercising this Warrant as specified 
in Section 1.1, Holder may from time to time convert this Warrant, in whole or 
in part, into a number of Shares determined by dividing (a) the aggregate fair 
market value of the Shares or other securities otherwise issuable upon 
exercise of this Warrant minus the aggregate Warrant Price of such Shares by 
(b) the fair market value of one Share. The fair market value of the Shares 
shall be determined pursuant to Section 1.3.

        1.3  Fair Market Value.  If the Shares are traded regularly in a public 
market, the fair market value of the Shares shall be the closing price of the 
Shares (or the closing price of the Company's stock, into which the Shares are 
convertible) reported for the business day immediately before Holder delivers 
its Notice of Exercise to the Company. If the Shares are not regularly traded 
in a public market, the Board of

Directors of the Company shall determine fair market value in its reasonable 
good faith judgment. The foregoing notwithstanding, if Holder advises the Board 
of Directors in writing that Holder disagrees with such determination, then the 
Company and Holder shall promptly agree upon a reputable investment banking 
firm to undertake such valuation. If the valuation of such investment banking 
firm is greater than that determined by the Board of Directors, then all fees 
and expenses of such investment banking firm shall be paid by the Company. In 
all other circumstances, such fees and expenses shall be paid by Holder.

        1.4  Delivery of Certificate and New Warrant. Promptly after Holder 
exercises or converts this Warrant, the Company shall deliver to Holder 
certificates for the Shares acquired and, if this Warrant has not been fully 
exercised or converted and has not expired, a new Warrant representing the 
Shares not so acquired.

        1.5  Replacement of Warrants. On receipt of evidence reasonably 
satisfactory to the Company of the loss, theft, destruction or mutilation of 
this Warrant and, in the case of loss, theft or destruction, on delivery of an 
indemnity agreement reasonably satisfactory in form and amount to the Company 
or, in the case of mutilation, or surrender and cancellation of this Warrant, 
the Company at its expense shall execute and deliver, in lieu of this Warrant, 
a new warrant of like tenor.

        1.6  Repurchase on Sale, Merger or Consolidation of the Company.

             1.6.1.  "Acquisition". For the purpose of this Warrant, 
"Acquisition" means any sale, license, or other disposition of all or 
substantially all of the assets (including intellectual property) of the 
Company, or any reorganization, consolidation, or merger of the Company where 
the holders of the Company's securities before the transaction beneficially own 
less than 50% of the outstanding voting securities of the surviving entity 
after the transaction.

             1.6.2.  Assumption of Warrant. If upon the closing of any 
Acquisition the successor entity assumes the obligations of this Warrant, then 
this Warrant shall be exercisable for the same securities, cash, and property 
as would be payable for the Shares issuable upon exercise of the unexercised 
portion of this Warrant as if such Shares were outstanding on the record date 
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted 
accordingly. The Company shall use reasonable efforts to cause the surviving 
corporation to assume the obligations of this Warrant.

             1.6.3.  Nonassumption. If upon the closing of any Acquisition the 
successor entity does not assume the obligations of his Warrant and Holder has 
not otherwise exercised this Warrant in full, then the unexercised portion of 
this Warrant shall be deemed to have been automatically converted pursuant to 
Section 1.2 and

thereafter Holder shall participate in the acquisition on the same terms as 
other holders of the same class of securities of the Company.

ARTICLE 2.  ADJUSTMENTS TO THE SHARES.

        2.1  Stock Dividends, Splits, Etc. If the Company declares or pays a 
dividend on its common stock (or the Shares if the Shares are securities other 
than common stock) payable in common stock, or other securities, subdivides the 
outstanding common stock into a greater amount of common stock, or, if the 
Shares are securities other than common stock, subdivides the Shares in a 
transaction that increases the amount of common stock into which the Shares are 
convertible, then upon exercise of this Warrant, for each Share acquired, 
Holder shall receive, without cost to Holder, the total number and kind of 
securities to which Holder would have been entitled had Holder owned the Shares 
of record as of the date the dividend or subdivision occurred.

        2.2  Reclassification, Exchange or Substitution. Upon any 
reclassification, exchange, substitution, or other event that results in a 
change of the number and/or class of the securities issuable upon exercise or 
conversion of this Warrant, Holder shall be entitled to receive, upon exercise 
or conversion of this Warrant, the number and kind of securities and property 
that Holder would have received for the Shares if this Warrant had been 
exercised immediately before such reclassification, exchange, substitution, or 
other event. Such an event shall include any automatic conversion of the 
outstanding or issuable securities of the Company of the same class or series 
as the Shares to common stock pursuant to the terms of the Company's Articles 
of Incorporation upon the closing of a registered public offering of the 
Company's common stock. The Company or its successor shall promptly issue to 
Holder a new Warrant for such new securities or other property. The new Warrant 
shall provide for adjustments which shall be as nearly equivalent as may be 
practicable to the adjustments provided for in this Article 2 including, 
without limitation, adjustments to the Warrant Price and to the number of 
securities or property issuable upon exercise of the new Warrant. The 
provisions of this Section 2.2 shall similarly apply to successive 
reclassifications, exchanges, substitutions, or other events.

        2.3  Adjustments for Combinations, Etc. If the outstanding Shares are 
combined or consolidated, by reclassification or otherwise, into a lesser 
number of shares, the Warrant Price shall be proportionately increased.

        2.4  Adjustments for Diluting Issuances. The Warrant Price and the 
number of Shares issuable upon exercise of this Warrant or, if the Shares are 
Preferred Stock, the number of shares of common stock issuable upon conversion 
of the Shares, shall be subject to the adjustment, from time to time, in the 
manner set forth on Exhibit B, if attached, in the event of Diluting Issuances 
(as defined on Exhibit A).

        2.5  No impairment.  The Company shall not, by amendment of its 
Articles of Incorporation or through a reorganization, transfer of assets, 
consolidation, merger, dissolution, issue, or sale of securities or any other 
voluntary action, avoid or seek to avoid the observance or performance of any 
of the terms to be observed or performed under this Warrant by the Company, but 
shall at all times in good faith assist in carrying out all the provisions of 
this Article 2 and in taking all such action as may be necessary or appropriate 
to protect Holder's rights under this Article against impairment. If the 
Company takes any action affecting the Shares or its common stock other than as 
described above that adversely affects Holder's rights under this Warrant, the 
Warrant Price shall be adjusted downward and the number of Shares issuable upon 
exercise of this Warrant shall be adjusted upward in such a manner that the 
aggregate Warrant Price of this Warrant is unchanged.

        2.6  Certificate as to Adjustments.  Upon each adjustment of the 
Warrant Price, the Company at its expense shall promptly compute such 
adjustment, and furnish Holder with a certificate of its Chief Financial 
Officer setting forth such adjustment and the facts upon which such adjustment 
is based. The Company shall, upon written request, furnish Holder a certificate 
setting forth the Warrant Price in effect upon the date thereof and the series 
of adjustments leading to such Warrant Price.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

        3.1  Representations and Warranties. The Company hereby represents and 
warrants to the Holder as follows:

             (a)  The initial Warrant Price referenced on the first page of 
this Warrant is not greater than (i) the price per share at which the Shares 
were last issued in an arms-length transaction in which at least $50,000 of the 
Shares were sold and (ii) the fair market value of the Shares as of the date of 
this Warrant.

             (b)  All Shares which may be issued upon the exercise of the 
purchase right represented by this Warrant, and all securities, if any, 
issuable upon conversion of the Shares, shall, upon issuance, be duly 
authorized, validly issued, fully paid and nonassessable, and free of any liens 
and encumbrances except for restrictions on transfer provided for herein; or 
under applicable federal and state securities laws.

        3.2  Notice of Certain Events.  If the Company proposes at any time (a) 
to declare any dividend or distribution upon its common stock, whether in cash, 
property, stock, or other securities and whether or not a regular cash 
dividend; (b) to offer for subscription pro rata to the holders of any class or 
series of its stock any additional shares of stock of any class or series or 
other rights; (c) to effect any reclassification or recapitalization of common 
stock; (d) to merge or consolidate with or into any other corporation, or sell, 
lease, license, or convey all or substantially all of its assets, or to 

liquidate, dissolve or wind up; or (e) offer holders of registration rights the 
opportunity to participate in an underwritten public offering of the company's 
securities for cash, then, in connection with each such event, the Company 
shall give Holder (1) at least 20 days prior written notice of the date on 
which a record will be taken for such dividend, distribution, or subscription 
rights (and specifying the date on which the holders of common stock will be 
entitled thereto) or for determining rights to vote, if any, in respect to 
the matters referred to in (c) and (d) above; (2) in the case of the matters 
referred to in (c) and (d) above at least 20 days prior written notice of the 
date when the same will take place (and specifying the date on which the 
holders of common stock will be entitled to exchange their common stock for 
securities or other property deliverable upon the occurrence of such event); 
and (3) in the case of the matter referred to in (e) above, the same notice as 
is given to the holders of such registration rights.

        3.3  Information Rights. So long as the Holder holds this Warrant 
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly 
after mailing, copies of all communiques to the shareholders of the Company, 
(b) within ninety (90) days after the end of each fiscal year of the Company, 
the annual audited financial statements of the Company certified by independent 
public accountants of recognized standing and (c) within forty-five (45) days 
after the end of each of the first three quarters of each fiscal year, the 
Company's quarterly, unaudited financial statements.

        3.4  Registration Under Securities Act of 1933, as amended. The Company 
agrees that the Shares or, if the Shares are convertible into common stock of 
the Company, such common stock, shall be subject to the registration rights set 
forth on Exhibit B, if attached.

ARTICLE 4.  MISCELLANEOUS.

        4.1  Term: Notice of Expiration. This Warrant is exercisable, in whole 
or in part, at any time and from time to time on or before the Expiration Date 
set forth above.

        4.2  Legends. This Warrant and the Shares (and the securities issuable, 
directly or indirectly, upon conversion of the Shares, if any) shall be 
imprinted with a legend in substantially the following form:

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, 
        AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED 
        WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO 
        RULE 144 OR AN OPTION OF COUNSEL REASONABLY SATISFACTORY TO THE 
        CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

        4.3  Compliance with Securities Laws on Transfer.  This Warrant and the 
Shares issuable upon exercise this Warrant (and the securities issuable, 
directly or indirectly, upon conversion of the Shares, if any) may not be 
transferred or assigned in whole or in part without compliance with applicable 
federal and state securities laws by the transferor and the transferee 
(including, without limitation, the delivery of investment representation 
letters and legal opinions reasonably satisfactory to the Company). The Company 
shall not require Holder to provide an opinion of counsel if the transfer is to 
an affiliate of Holder or if there is no material question as to the 
availability of current information as referenced in Rule 144(c), Holder 
represents that it has complied with Rule 144(d) and (e) in reasonable detail, 
the selling broker represents that it has complied with Rule 144(f), and the 
Company is provided with a copy of Holder's notice of proposed sale.

        4.4  Transfer Procedure.  Subject to the provisions of Section 4.2, 
Holder may transfer all or part of this Warrant or the Shares issuable upon 
exercise of this Warrant (or the securities issuable, directly or indirectly, 
upon conversion of the Shares, if any) by giving the Company notice of the 
portion of the Warrant being transferred setting forth the name, address and 
taxpayer identification number of the transferee and surrendering this Warrant 
to the Company for reissuance to the transferee(s) (and Holder, if applicable). 
Unless the Company is filing financial information with the SEC pursuant to the 
Securities Exchange Act of 1934, the Company shall have the right to refuse to 
transfer any portion of this Warrant to any person who directly competes 
with the Company.

        4.5  Notices.  All notices and other communications from the Company to 
the Holder, or vice versa, shall be deemed delivered and effective when given 
personally or mailed by first-class registered or certified mail, postage 
prepaid, at such address as may have been furnished to the Company or the 
Holder, as the case may be, in writing by the Company or such Holder from time 
to time.

        4.6  Waiver.  This Warrant and any term hereof may be changed, waived, 
discharged or terminated only by an instrument in writing signed by the party 
against which enforcement of such change, waiver, discharge or termination is 
sought.

        4.7  Attorneys' Fees.  In the event of any dispute between the parties 
concerning the terms and provisions of this Warrant, the party prevailing in 
such dispute shall be entitled to collect from the other party all costs 
incurred in such dispute, including reasonable attorneys' fees.

        4.8  Governing Law.  This Warrant shall be governed by and construed in 
accordance with the laws of the State of California, without giving effect to 
its principles regarding conflicts of law.

                                      Inland Casino Corporation

                                      ---------------------------------------

                                      By  /s/
                                      ---------------------------------------

                                      Name
                                          -----------------------------------
                                                      (Print)

                                      Title: Chairman of the Board, President,
                                             or Vice President

                                      By  /s/  Duane M. Eberlein
                                      ---------------------------------------

                                      Name
                                          -----------------------------------
                                                      (Print)

                                      Title: Chief Financial Officer, Secretary,
                                             Assistant Treasurer or Assistant
                                             Secretary

                                EXHIBIT A

                         Anti-Dilution Provisions

        In the event of the issuance (a "Diluting Issuance") by the Company, 
after the Issue Date of the Warrant, of Common Shares or equity securities 
convertible into Common Shares at a price per share less than the Warrant 
Price, the number of Shares issuable such that the Holder shall receive 
additional shares of Common Stock such that the effective Warrant Price shall 
be no greater than the price at which the Diluting Issuance was made.

        Under no circumstances shall the aggregate Warrant Price payable by the 
Holder upon exercise of the Warrant increase as a result of any adjustment 
arising from a Diluting Issuance.

        Notwithstanding anything to the contrary, Company may issue options to 
employees for up to 500,000 shares per year but not to exceed 1,000,000 shares 
in total without such options being Diluting Issuances.

                                   EXHIBIT B

                              Registration Rights

        The Shares shall be deemed "registrable securities" or otherwise 
entitled to "piggy back" registration rights in accordance with the terms of 
any agreement between the Company and any of its investors (the "Agreement"), 
provided Holder shall not exercise such registration rights more than twice. 

        The Company agrees that no amendments will be made to the Agreement 
which would have an material adverse impact on Holder's registration rights 
thereunder without the consent of Holder. By acceptance of the Warrant to which 
this Exhibit B is attached, Holder shall be deemed to be a party to the 
Agreement for solely for purposes of the registration rights. 

        If no Agreement exists, then the Company and the Holder shall enter 
into a form of Registration Rights Agreement which shall be no less favorable 
than any such agreement subsequently entered into between the Company and any 
investors and in no event providing less than piggy back registration rights. 

 

Basic Info X:

Name: THIS WARRANT
Type: this Warrant
Date: Feb. 14, 1996
Company: VENTURE CATALYST INC
State: Utah

Other info:

Date:

  • October 10 , 1995
  • October 10 , 2000

Organization:

  • Inland Casino Corporation
  • Fair Market Value
  • Notice of Exercise
  • Board of Directors
  • Notice of Certain Events
  • Notice of Expiration
  • Securities Laws on Transfer

Location:

  • Utah
  • California

Money:

  • $ 5.00
  • $ 50,000

Person:

  • Duane M. Eberlein

Percent:

  • 50 %