EXHIBIT 10.3
RESTRUCTURING AGREEMENT
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THIS RESTRUCTURING AGREEMENT (the "Agreement"), dated as of May 13, 2002,
is made by and among Xxxxxxxx Xxxxx ("Xxxxx"), Xxxx Xxxxx Xxxxx ("Xxxxx"; and
together with Xxxxx, the "Note Holders") and Venture Catalyst Incorporated, a
Utah corporation (the "Company").
RECITALS
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A. The Note Holders are the holders of those certain Promissory Notes made
by the Company which are listed on Exhibit A hereto (the "Notes").
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X. X. Xxxxxx Xxxxx, XX ("Xxxxx") owns all of the outstanding shares of
capital stock of Xxxxx Casino Marketing, Inc., a Delaware corporation ("Xxxxx
Corporation").
X. Xxxxx has expressed an interest in negotiating with the Special
Committee of the Board of Directors of the Company a merger transaction (the
"Merger") which would have the effect of taking the Company private and in which
the shareholders of the Company would, in exchange for their shares of common
stock of the Company, receive cash plus the right to receive additional
contingent consideration. Xxxxx currently contemplates that in connection with
the Merger the Company would merge with and into Xxxxx Corporation, with Xxxxx
Corporation being the surviving corporation.
X. Xxxxx and the Note Holders contemplate that as a condition precedent to
the consummation of the proposed Merger, the Company and the Note Holders would
agree to restructure the indebtedness represented by the Notes.
E. In contemplation of the proposed Merger, the Note Holders and the Company
desire to restructure the indebtedness represented by the Notes (the
"Restructuring") by canceling the Notes, and all outstanding principal and
accrued and unpaid interest thereunder, and entering into this Agreement,
pursuant to which the Company will issue to the Note Holders the Class A
Contingent Promissory Notes in substantially the same form as attached hereto as
Exhibit B (the "Contingent Notes"), pursuant to which the Company would make
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principal payments to the Note Holders in amounts based on the Gross Revenues
(as defined in the Contingent Notes) of the Company.
F. The Note Holders and the Company desire to enter into this Agreement to
set forth the terms and conditions of the Restructuring.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
AGREEMENT
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ARTICLE I
RESTRUCTURING
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1.1 Exchange of Notes. At the Closing (as defined below), the Note Holders
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shall sell, assign, transfer and deliver to the Company, and the Company shall
acquire and cancel the Notes in exchange for the execution of the Contingent
Notes by the Company and the delivery thereof to the Note Holders. The Company
and the Note Holders agree that the execution and delivery of the Contingent
Notes by the Company to the Note Holders shall constitute full satisfaction of
the Notes and that effective as of the Closing, the Notes and all rights and
obligations thereunder shall be canceled.
1.2 Closing. The closing of the transactions contemplated in this Agreement
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(the "Closing") shall take place at the offices of Paul, Hastings, Xxxxxxxx &
Xxxxxx LLP at 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx, at
10:00 a.m. on or before the closing date of the Merger, or at such other time
and place as the Company and the Note Holders mutually agree upon orally or in
writing. The date of the Closing shall be referred to herein as the "Closing
Date."
1.3 Several Liability. The obligations and liabilities of the Note Holders
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under this Agreement shall be several and not joint.
1.4 Deliveries by Note Holders. At the Closing, each Note Holder shall
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deliver to the Company:
(a) the original Notes listed on Exhibit A which were issued in favor
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of the Note Holder, along with Assignments of Notes, in a form reasonably
acceptable to the Company, executed in favor of the Company;
(b) executed original signature pages to the Contingent Note to which
the Note Holder is a party;
(c) a compliance certificate executed by the Note Holder, dated as of
the Closing Date, certifying that the representations and warranties made by the
Note Holder in Sections 4.2 or 4.3, as applicable, and 4.4 of the Agreement are
true and correct as of the Closing Date; and
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(d) such other instruments and documents which are required to be
delivered at the Closing by the Note Holders as are reasonably requested by the
Company in order to consummate the transactions contemplated by this Agreement.
1.5 Deliveries by Company. At the Closing, the Company shall deliver to
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each Note Holder:
(a) an executed original signature page to the Contingent Note to be
issued by the Company in favor of the Note Holder;
(b) a compliance certificate executed by the Company, dated as of the
Closing Date, certifying that the representations and warranties made by the
Company in Section 4.1 of the Agreement are true and correct as of the Closing
Date; and
(c) such other instruments and documents which are required to be
delivered at the Closing by the Company as are reasonably requested by each Note
Holder in order to consummate the transactions contemplated by this Agreement.
1.6 Note Holders' Conditions to Closing. Except as otherwise specifically
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set forth in this Agreement or unless waived by each Note Holder, the
obligations of each Note Holder under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions:
(a) Representations and Warranties to Be True and Correct. The
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representations and warranties of the Company contained in Section 4.1 hereof
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date.
(b) No Actions, Proceedings, Etc. No action, proceeding, investigation
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or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain, prohibit or
obtain substantial damages in respect of, or which is related to, or arises out
of, this Agreement or the consummation of the transactions contemplated herein,
if such action, proceeding, investigation or legislation, in the reasonable
judgment of any of the parties hereto, would make it inadvisable to consummate
such transactions.
(c) Acknowledgment and Agreement. Xxxxx shall have executed and
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delivered to the Company and the Note Holders the Acknowledgment and Agreement
substantially in the form attached hereto as Exhibit C.
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(d) Deliveries. The Company shall have delivered to each Note Holder
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each of the items required under the provisions of Section 1.5 hereof.
1.7 Company Conditions to Closing. Except as otherwise specifically set
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forth in this Agreement or unless waived by the Company, the obligations of the
Company under
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this Agreement are subject to the fulfillment, prior to or on the Closing Date,
of each of the following conditions:
(a) Representations and Warranties to Be True and Correct. The
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representations and warranties of each Note Holder contained in Sections 4.2,
4.3 and 4.4 hereof shall be true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date.
(b) No Actions, Proceedings, Etc. No action, proceeding, investigation
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or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain, prohibit or
obtain substantial damages in respect of, or which is related to, or arises out
of, this Agreement or the consummation of the transactions contemplated herein,
if such action, proceeding, investigation or legislation, in the reasonable
judgment of any of the parties hereto, would make it inadvisable to consummate
such transactions.
(c) Approval of Merger. The Board of Directors and the shareholders of
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the Company shall have approved the Merger and a related Agreement and Plan of
Merger (the "Merger Agreement"), by the requisite votes necessary under
applicable law to authorize the Company to execute, deliver and carry out the
Merger Agreement and to consummate the Merger.
(d) Merger Agreement. The Company, Xxxxx, and Xxxxx Corporation shall
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have entered into the Merger Agreement.
(e) Financing Commitment. Xxxxx Corporation shall have obtained a
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commitment letter or otherwise arranged for financing from a suitable financing
source in an amount sufficient to consummate the purchase of the outstanding
shares of capital stock of the Company, other than Excluded Shares (as defined
in the Merger Agreement), in connection with the Merger.
(f) Acknowledgment and Agreement. Xxxxx shall have executed and
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delivered to the Company and the Note Holders the Acknowledgment and Agreement
substantially in the form attached hereto as Exhibit C.
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(g) Timing of Closing. The Closing of the transactions contemplated in
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this Agreement shall take place prior to the effective date of the Merger.
(h) Deliveries. Each Note Holder shall have delivered to the Company
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each of the items required under the provisions of Section 1.4 hereof.
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ARTICLE II
WAIVER BY NOTE HOLDERS
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2.1 Waiver by Note Holders. In connection with the Restructuring, effective
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at the Closing, the Note Holders expressly waive all rights, which they
currently have or may have at any time in the future, arising from or relating
to the Notes, including, without limitation, all rights pursuant to contracts,
agreements, undertakings or commitments related thereto, other than those
provided for in this Agreement and the Contingent Notes.
ARTICLE III
MUTUAL RELEASE
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3.1 Mutual Release. Except for the obligations created by this Agreement
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and the Contingent Notes, effective at the Closing, the Company and the Note
Holders fully, finally and forever release and agree to hold harmless each other
and all their respective successors, assigns, officers, directors, stockholders,
employees, lenders, affiliates, attorneys, consultants, advisors and agents from
and against any and all manner of action or actions, cause or causes of action,
in law or in equity, suits, debts, liabilities, claims, demands, damages,
losses, costs and expenses, of any nature whatsoever, known or unknown, fixed or
contingent, foreseeable or unforeseeable (collectively, the "Claims"), which the
parties may have at the Closing Date or may thereafter have against any of the
released parties by reason of any matter, cause or thing whatsoever from the
beginning of time to the Closing Date arising out of or based upon the Notes
(the "Release").
Each of the parties hereto acknowledges that it may hereafter discover
facts different from or in addition to those which it now knows or believes to
be true with respect to the Claims which are the subject of the Release and each
party expressly agrees to assume the risk of the possible discovery of
additional or different facts, and agrees that the Release shall be and remain
effective in all respects, regardless of such additional or different facts.
Each of the parties hereto understands and agrees that it shall expressly waive
and relinquish all rights and benefits, if any, it may have under Section 1542
of the California Civil Code with respect to the Claims which are the subject of
the Release. California Civil Code Section 1542 reads as follows:
"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."
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In connection with the Release, each of the parties hereto represents and
warrants to the other party that it has not assigned or transferred, and it will
not assign or transfer, any Claim or any interest in any Claim which it may have
against any of the released parties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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4.1 Company. The Company hereby represents and warrants to the Note Holders
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that: (a) the Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Utah and has the requisite power and
authority to carry on its business as now conducted and as proposed to be
conducted; (b) the execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby are
within the Company's corporate powers and have been duly authorized by all
necessary corporate action on the part of the Company; (c) this Agreement has
been and the Contingent Notes will be duly executed and delivered by the
Company; (d) this Agreement constitutes and the Contingent Notes will constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its or their terms, except that such enforceability
may be limited by (X) bankruptcy, insolvency, reorganization, moratorium or
other similar laws, or by equitable principles, relating to or limiting the
rights of creditors generally and (Y) limitations imposed by law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies; (e) the execution, delivery and performance by the
Company of this Agreement, the issuance of the Contingent Notes and the
consummation of the transactions contemplated hereby require no order, license,
consent, authorization or approval of, or exemption by, or action by or in
respect of, or notice to, or filing or registration with, any governmental body,
agency or official; (f) the execution, delivery and performance by the Company
of this Agreement and the Contingent Notes and the consummation of the
transactions contemplated hereby or thereby do not and will not (i) violate the
articles of incorporation or bylaws of the Company, (ii) violate any applicable
law, rule, regulation, judgment, injunction, order or decree, (iii) require any
consent or other action by any person or entity under, constitute a default
under (with due notice or lapse of time or both), or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Company or to a loss of any benefit to which the Company is entitled under, any
provision of any agreement or other instrument binding upon the Company or any
of the Company's assets or properties or (iv) result in the creation or
imposition of any material lien on any property or asset of the Company; (g) the
authorized capital stock of the Company consists of 100,000,000 shares of common
stock of the Company, par value $0.001 per share (the "Common Stock"); (h) there
are 7,206,598 shares of Common Stock outstanding as of the date of this
Agreement; (i) there are options to purchase 5,887,312 shares of Common Stock
and Warrants to acquire 144,775 shares of Common Stock outstanding as of the
date of this Agreement; and (j) except as set forth in this Section 4.1, there
are no authorized or outstanding equity securities of the Company, or any
securities convertible into or exchangeable therefor, or options or other rights
to acquire from the Company, or other obligations of the Company to issue,
directly or indirectly, any equity securities of the Company.
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4.2 Xxxxx. Xxxxx hereby represents and warrants to the Company that: (a)
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Xxxxx has the requisite power and authority to enter into this Agreement and the
Contingent Note, to perform his obligations hereunder and thereunder, and to
sell, assign and transfer the Notes held by him in accordance herewith; (b)
Xxxxx'x Notes are being transferred to the Company free and clear of any and all
liens or encumbrances of any nature whatsoever; (c) this Agreement has been and
the Contingent Note will be duly executed and delivered by Xxxxx; (d) this
Agreement constitutes and the Contingent Note will constitute legal, valid and
binding obligations of Xxxxx, enforceable against Xxxxx in accordance with their
terms, except that such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws, or by equitable
principles, relating to or limiting the rights of creditors generally and (ii)
limitations imposed by law or equitable principles upon the availability of
specific performance, injunctive relief or other equitable remedies; and (e) 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 Xxxxx in connection with the
execution, delivery and performance of this Agreement or the Contingent Note or
the consummation of the transactions contemplated hereby or thereby.
4.3 Xxxxx. Xxxxx hereby represents and warrants to the Company that: (a)
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Xxxxx has the requisite power and authority to enter into this Agreement and the
Contingent Note, to perform his obligations hereunder and thereunder, and to
sell, assign and transfer the Notes held by him in accordance herewith; (b)
Xxxxx' Notes are being transferred to the Company free and clear of any and all
liens or encumbrances of any nature whatsoever; (c) this Agreement has been and
the Contingent Note will be duly executed and delivered by Xxxxx; (d) this
Agreement constitutes and the Contingent Note will constitute legal, valid and
binding obligations of Xxxxx, enforceable against Xxxxx in accordance with their
terms, except that such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws, or by equitable
principles, relating to or limiting the rights of creditors generally and (ii)
limitations imposed by law or equitable principles upon the availability of
specific performance, injunctive relief or other equitable remedies; (e) 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 Xxxxx in connection with the
execution, delivery and performance of this Agreement or the Contingent Note or
the consummation of the transactions contemplated hereby or thereby; and (f)
Xxxxx is not married and no other person or entity has any rights to or
interests in the Xxxxx' Notes.
4.4 Investment Representations. Each Note Holder further represents and
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warrants that such Note Holder: (a) has substantial experience in evaluating and
investing in transactions involving companies similar to the Company such that
he is capable of evaluating the merits and the risks of his investment in the
Company and has the capacity to protect his interests, (b) understands the
acquisition of the Contingent Note is a speculative investment which involves a
high degree of risk of loss of such investment, (c) is able to bear the economic
risk of his investment for an indefinite period of time, including the risk of a
complete loss of the
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investment, (d) is acquiring the Contingent Note for investment for his own
account, not as a nominee or agent, and not with a view to the resale or
distribution thereof and (e) is an "accredited investor" as defined in Rule 501
of Regulation D under the Securities Act of 1933, as amended.
ARTICLE V
MISCELLANEOUS
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5.1 Notices. All notices required or permitted hereunder shall be in
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writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address indicated for such party on the signature page
hereof or at such other address as such party may designate by ten (10) days
advance written notice to the other parties hereto.
5.2 Informed Consent. Prior to the execution of this Agreement, the parties
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have apprised themselves of sufficient relevant information, either through
their attorneys or other sources of their own selection, in order that they
might intelligently exercise their own judgment in deciding whether to execute
this Agreement.
5.3 Voluntary Act. Each party has read this Agreement and understands its
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terms. Each party has executed this Agreement voluntarily and with full
knowledge of its legal significance.
5.4 Assignment; Inurement. Neither this Agreement nor any of the rights,
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interests or obligations hereunder shall be assignable by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties hereto. Notwithstanding the foregoing, the parties
hereto consent to the assignment of this Agreement and the rights, interests or
obligations hereunder by the Company to Xxxxx Corporation as a result of the
consummation of the Merger; provided, that at the time of such merger (x) Xxxxx
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directly or indirectly controls the surviving entity in the merger and (y) the
surviving entity is the successor in interest to the business and assets of the
disappearing entity in the merger. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
predecessors, heirs, successors, representatives and assigns.
5.5 Fees and Expenses. Each party shall be liable for its own costs and
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expenses incurred in connection with this Agreement.
5.6 Further Assurances. Each party agrees to perform any further acts and
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execute and deliver any further documents which reasonably may be necessary to
carry out the provisions and intent of this Agreement.
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5.7 Governing Law. The validity, interpretation and performance of this
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Agreement shall be governed by and construed under the law of the State of
California without regard to conflicts of laws principles.
5.8 Enforcement. The parties hereto consent and agree that exclusive
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jurisdiction for the resolution of any dispute between them in respect of the
enforcement of the rights and duties created by this Agreement shall reside in
any federal or state court sitting in San Diego County, California. Service in
any action to enforce rights created by this Agreement may be effected on
counsel-of-record for any party to this Agreement. The prevailing party in any
action to enforce this Agreement shall be entitled to recover its costs and
expenses, including, without limitation, reasonable attorneys' fees.
5.9 Severability. In the event that any one or more of the provisions (or
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parts thereof) contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired or affected, it being intended that all of the rights and privileges of
each party shall be enforceable to the fullest extent permitted by law.
5.10 Entire Agreement; Amendments and Waivers. This Agreement (including
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the documents, schedules and exhibits referred to herein) constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. This Agreement may not be amended or
modified except by an instrument in writing signed on behalf of each of the
parties hereto. No waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
5.11 Headings. Headings in this Agreement are included for convenience of
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reference only and shall not be deemed a part of or in any manner to affect this
Agreement or any provision hereof.
5.12 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
[Signature page follows]
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[SIGNATURE PAGE TO RESTRUCTURING AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"NOTE HOLDERS" /S/ XXXXXXXX XXXXX
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Xxxxxxxx Xxxxx
Address:
000 Xxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile No.:
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/S/ XXXX XXXXX
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Xxxx Xxxxx Xxxxx
Address:
00 Xxxxx Xxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx
Facsimile No.: 000-0000-0000
"COMPANY" VENTURE CATALYST INCORPORATED,
a Utah corporation
By: /S/ X. X. XXXX
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Name: Xxxxxx X. Xxxx
Title: Executive Vice President - Finance
Address:
000 Xxxxxx xx xx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
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CONSENT OF SPOUSE OF XXXXXXXX XXXXX
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The undersigned spouse of the party to the foregoing Agreement acknowledges
on her own behalf that: (i) I have read the foregoing Agreement and I know its
contents, (ii) I am aware that by its provisions my spouse has agreed to sell,
assign, transfer and deliver to the Company all of the Notes owned by my spouse,
including my community interest therein, and (iii) I hereby consent to the sale,
approve of the provisions of the Agreement, and agree that such Notes, including
my interest therein, are subject to the provisions of the Agreement and that I
will take no action at any time to hinder the operation of the Agreement on such
Notes or my interest therein.
/S/ XXXXXX XXXXXXX
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Print Name: Xxxxxx Xxxxxxx
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Exhibit A
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The Notes
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1. Promissory Note dated September 30, 1996 by the Company in favor of
Xxxxxxxx Xxxxx in the original principal amount of $1,768,550.
2. Promissory Note dated September 30, 1997 by the Company in favor of
Xxxxxxxx Xxxxx in the original principal amount of $1,000,000.
3. Promissory Note dated September 30, 1998 by the Company in favor of
Xxxxxxxx Xxxxx in the original principal amount of $1,000,000.
4. Promissory Note dated September 30, 2000 by the Company in favor of
Xxxxxxxx Xxxxx in the original principal amount of $1,000,000.
5. Promissory Note dated September 30, 1996 by the Company in favor of Xxxx
Xxxxx Xxxxx in the original principal amount of $1,731,450.
6. Promissory Note dated September 30, 1997 by the Company in favor of Xxxx
Xxxxx Xxxxx in the original principal amount of $1,000,000.
7. Promissory Note dated September 30, 1998 by the Company in favor of Xxxx
Xxxxx Xxxxx in the original principal amount of $1,000,000.
8. Promissory Note dated September 30, 2000 by the Company in favor of Xxxx
Xxxxx Xxxxx in the original principal amount of $1,000,000
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