EXHIBIT 10.16
"RCT" means the material omitted has been filed with the
Securities & Exchange Commission with an application requesting
confidential treatment.
LICENSE AGREEMENT
THIS AGREEMENT is entered into as of the 24th day of April 1997,
between Lucky Stores, Inc., a Nevada corporation ("Licensor"),
and Cardivan Company, a Nevada corporation ("Licensee").
Licensee and Licensor are collectively referred to as "the
Parties".
1. Purpose. This Agreement sets forth the terms and conditions
under which the Licensee shall have the exclusive right to
operate certain gaming devices (the "Devices") (i) within each of
the stores operated by Licensor in the State of Nevada which are
designated on Exhibit "A" attached hereto and incorporated herein
by reference (the "Existing Locations"), and (ii) in any
additional stores opened or acquired by Licensor or an affiliate
of Licensor for business to the public in the state of Nevada
during the term of this Agreement which become subject to this
Agreement pursuant to Section 4(d) hereof (the "New Locations",
together with the Existing Locations, the "Licensed Locations").
Notwithstanding the foregoing, an off-site replacement of a
Licensed Location which constitutes a "replacement store" in
accordance with Licensor's internal policies, which opens
concurrently with the closing of the Licensed Location it is
replacing, and which is located not more than one mile from the
Licensed Location it is replacing, shall not constitute a New
Location for purposes of this Agreement.
2. License. Licensor hereby grants to Licensee the use of such
amount of space (the "Gaming Space") as is reasonably required to
set up the number of Devices currently permitted at such Licensed
Location. For purposes of illustration, the Gaming Space at a
Licensed Location in which 15 xxxx validator-equipped Devices are
located would not be required to contain more than 450 square
feet of space. The Gaming Space shall be located as close to the
entrance and checkstand of the Licensed Location as is reasonably
practicable with the exact location and square footage of the
Gaming Space to be determined by mutual agreement of the parties.
Licensee is also hereby granted an exclusive right to operate up
to the maximum number of Devices currently allowed by the State
of Nevada in each of the Licensed Locations. Notwithstanding the
foregoing, the size of the Gaming Space and the location of the
Devices in each of the Existing Locations shall be continued in
the same manner as at the time of the execution of this Agreement
except as changes thereto are made from time to time by mutual
agreement between Licensor and Licensee. Licensor agrees to use
its best efforts to expand the size of the Gaming Space at the
Existing Locations where such expansion is required in order to
replace the Devices currently located in such Existing Locations
with an equal number of Devices containing xxxx validators and
shall use its best efforts to complete any such required
expansions by April 30, 1998. In the event that Licensor is not
able to complete any such required expansions by April 30, 1998,
the parties shall negotiate in good faith to arrive at an
appropriate adjustment to the monthly fees payable hereunder;
provided, that in no event shall the fee for any Licensed
Location be reduced to an amount less than RCT per month.
3. Term. The term of the license for each Licensed Location
shall begin on July 1, 1997 and shall expire at midnight on RCT.
In addition, Licensee may, at its sole option, extend the term of
this Agreement for an additional period of RCT commencing
on RCT and expiring at midnight on RCT (the "Option Period") by
giving written notice to Licensor of its intention to do so no
earlier than RCT and no later than RCT; provided, that such
option may only be exercised if (i) Licensee concurrently
exercises its option to extend the term of that certain License
Agreement between Licensee and American Drug Stores, Inc. ("ADS")
dated of even date herewith, and (ii) Corral United, Inc.
concurrently exercises its option to extend the term of that
certain License Agreement between Corral United, Inc. and ADS
dated of even date herewith. Licensee shall have no option to
renew or extend this License Agreement beyond RCT.
4. Fees.
a. During the initial term of this License Agreement, Licensee
agrees to pay Licensor the following amount per Licensed Location
per month:
Period Per Licensed Location Per Month
______ _______________________________
RCT RCT
RCT RCT
b. During the Option Period the Licensee agrees to pay Licensor
the following amount per Licensed Location per month:
Option Period Per Licensed Location Per Month
_____________ _______________________________
RCT RCT
RCT RCT
c. The monthly amounts set forth above shall be subject to
increase from time to time during the term of this Agreement and
any extension hereof as follows. During the one-month period
prior to each of RCT and RCT, respectively, Licensee shall
determine the average monthly fee per Device being paid by
Licensee to other customers pursuant to written contracts having
a remaining duration of one year or more, or which may be paid
pursuant to contracts under negotiation, for comparable store
locations (the "Comparable Rent"). If the Comparable Rent is
greater than the fee provided for above by more than 5%, the
monthly fee shall be increased to the Comparable Rent for the
duration of the applicable period.
d. During the term of this Agreement, if Licensor opens or
acquires any New Location and Licensor determines to include
Devices at such New Location, Exhibit A hereto shall be amended
to include such New Location and the monthly fees payable
hereunder shall be adjusted accordingly. In the case of a New
Location opened or acquired on or after RCT, the fees due
pursuant to this Section 4 with respect to such New Location
shall be RCT fee during the RCT period following the date such
New Location is opened for business by Licensor; provided, that
if Licensor has not taken all steps required to be taken by it to
permit Licensee to commence operations at such New Location, the
RCT period shall not commence until all such actions have been
taken. In addition, in the event an Existing Location is closed
for renovation for a period of RCT or more, the Fees with respect
to such renovated Existing Location shall be RCT fee due pursuant
to this Section 4 during the RCT period following the date such
renovated Existing Location is reopened for business by Licensor;
provided, that if Licensor has not taken all steps required to be
taken by it to permit Licensee to recommence operations at such
Existing Location, the RCT period shall not commence until all
such actions have been taken.
e. The above fee shall be due and payable on the first day of
every month. If any of the above fees are not paid when due or
within fifteen (15) days thereafter, Licensee shall pay Licensor
interest on all amounts delinquent from the date of delinquency
until paid at a rate equal to 150 percent of the prime rate
charged preferred customers by Bank of America Nevada, determined
as of the first day of the month preceding such delinquency and
adjusted as of the first day of each month during the period of
such delinquency, but not to exceed the greater of 24 percent per
annum or the highest rate permitted by applicable law.
f. Licensor and Licensee agree that as of June 30, 1997,
Licensor will hold a security deposit (the "Security Deposit") in
the amount of RCT pursuant to agreements previously entered into
between the parties, which amount consists of the principal
amount of the original security deposit together with interest
accrued thereon through June 30, 1997. Commencing July 1, 1997,
no further interest shall be payable by Licensor to Licensee with
respect to the Security Deposit and commencing June 1, 1998 and
on each June 1, thereafter, RCT of such Security Deposit shall be
applied as an offset against the monthly fees payable by Licensee
under this Agreement until such time as the Security Deposit has
been exhausted.
g. In the event that (i) Licensor should effect a material
reduction in the hours of operation of the Licensed Locations,
considered as a whole, from the hours of operation in effect on
the date of this Agreement, or (ii) there should be a change in
the laws or regulations applicable to the operation of gaming
devices in retail food and drug facilities which has the effect
of materially reducing the revenues received by Licensee from its
operation of the Devices hereunder, the parties shall negotiate
in good faith to arrive at an equitable adjustment to the terms
of the Agreement.
5. Taxes. Licensee agrees to pay all taxes (other than real
estate taxes) payable in connection with the conduct of its
business in the Licensed Locations, including personal property
taxes levied against the Devices, fixtures, and other personal
property of the Licensee in the Licensed Locations. Licensee
will pay all social security, unemployment, and old age benefit
taxes, state, federal, and local, or other similar taxes due with
respect to employees or wages paid to employees of the Licensee
in the Licensed Locations. Licensee will maintain and pay all
license fees, federal, state, county, or city, necessary for its
operations in the Licensed Locations.
6. Use and Operation. Licensee agrees to use the Gaming Space
within the Licensed Locations as a department for the sole
purpose of operating the Devices in such space and will at all
times conduct said department and all branches of its business in
a first-class business like and attractive high-grade and proper
manner, including, without limitation, (1) maintaining the
Devices in good condition and repair at its own expense and at no
expense to Licensor; (2) replacing any out of date Devices at its
own expense with modern, up-to-date Devices from time to time;
(3) employing a change cashier or installing money changing
devices so that the store cashiers in the Licensed Location will
not be required to make change for the operation of the Devices;
and (4) not employing any person or persons within the Licensed
Locations deemed objectionable by Licensor, Licensee agreeing
upon request of Licensor to remove any such objectionable
employee as quickly as reasonably possible under existing
federal, state, and local laws. Signs of such type and size as
may be mutually agreed upon by Licensor and Licensee shall be
placed by Licensee in a conspicuous place at each of the Licensed
Locations stating that Licensee is the owner and operator of the
Devices. Licensor shall not change the smoking policies in the
Gaming Spaces from those currently in effect without the prior
written consent of Licensee, unless and to the extent such change
is required by law or regulation.
7. Title to Property. All personal property (including,
without limitation, the Devices) placed on the Licensed Locations
by Licensee shall be and remain the personal property of Licensee
(except as provided in Section 12 with respect to default) and,
upon the expiration or earlier termination of this Agreement,
Licensee shall within ten (10) days thereafter and at its sole
expense, remove from the Licensed Locations all such personal
property and restore such Licensed Locations to their original
conditions, ordinary wear and tear excepted.
8. General Covenants. Licensee agrees to comply with all
applicable laws, ordinances, and governmental regulations now in
force or hereafter enacted relating to the business operations of
the Licensee in the Licensed Locations; to make any and all
alterations, repairs, and changes, at its expense, required by
any such laws, ordinances, or governmental regulations; to
maintain the Gaming Space occupied by Licensee within each of the
Licensed Locations in a clean state and in good condition and
repair; not to make any alterations in such space without the
prior written consent of Licensor; and at the expiration or
termination of this Agreement, to surrender peaceable possession
thereof to Licensor in as good condition as it received the same,
loss or damage by fire (except if caused by the act or neglect of
Licensee or its employees) and wear and tear resulting from
reasonable use excepted.
9. Indemnification and Insurance. Licensee agrees to indemnify
and hold Licensor harmless from all claims, demands, causes of
action, losses, damages, and liability, including costs and
expenses and reasonable attorneys' fees incurred by Licensor in
connection with any claim by third parties, including employees
of Licensee, for injury to or death or damage to property
occurring in or on or about the portions of the Licensed
Locations licensed to Licensee or arising out of operations
conducted by Licensee. Licensee, at its own cost and expense,
shall maintain commercial general liability and automobile
liability insurance with a limit of not less than $1,000,000
applicable to any one occurrence. Such insurance shall name
Licensor as an additional insured with respect to operations
conducted in connection with this Agreement. Licensee shall
maintain Workers' Compensation insurance for its employees in the
form required by the State of Nevada or provide Workers'
Compensation on a self-insured basis in compliance with
applicable Nevada regulations. Licensee shall, upon request,
provide Licensor with certificate(s) evidencing the foregoing
insurance coverages. Whether or not it elects to insure its
personal property at locations covered by this Agreement,
Licensee hereby waives any right of recovery from Licensor for
any loss or damage to such property resulting from any of the
perils insured against in the standard form fire insurance policy
with Extended Coverages and Vandalism and Malicious Mischief
Endorsements. To the extent that any insurance maintained by
Licensee includes coverage against additional perils, this waiver
shall apply with respect to loss damage resulting from such other
perils.
10. Termination of License. If Licensor ceases to do business
in any of the Licensed Locations for any reason whatsoever, this
License Agreement shall terminate as to the Licensed Locations
where such business is discontinued, effective at the time of
such discontinuance, and thereafter the license fees payable
under this Agreement will be reduced pro rata for the affected
Licensed Locations. This License Agreement will continue to
apply to all remaining Licensed Locations.
11. Interruption of Business. If the business of any Licensed
Locations subject to this Agreement is substantially interrupted
by reason of a major remodeling, fire, other casualty, or any
other cause not the fault of Licensee, and such interruption
substantially and adversely affects the business of Licensee in
such Licensed Location, then, from and after such interruption
and until the cause thereof has been corrected or eliminated, the
fees due Licensor hereunder for such Licensed Locations shall be
equitably reduced or abated to the extent agreed between the
parties.
12. Default. If Licensee (i) defaults in the payment of the
fees payable by it hereunder or fails to perform any other of its
obligations under this Agreement, and Licensee fails to cure such
default within a period of fifteen (15) days after written notice
from Licensor, or (ii) Licensee defaults in the payment of fees
or performance of its other obligations under that certain
License Agreement between Licensee and American Drug Stores, Inc.
("ADS") dated of even date herewith, and such default is not
cured within the grace period provided therein, or (iii) Corral
United, Inc., an affiliate of Licensee, defaults in the payment
of fees or performance of its obligations under that certain
License Agreement between Corral United, Inc. and ADS dated of
even date herewith and such default is not cured within the
applicable grace period provided therein, then, in any of such
events, Licensor shall have all rights and remedies now or
hereafter provided by law and, in addition, may do any one or
more of the following:
(a) Terminate this Agreement by giving written notice to
Licensee; resume possession of the space occupied by Licensee in
the Licensed Locations; retain all Devices, fixtures, and other
personal property of Licensee remaining on such space and full
right and authority to sell, lease, or otherwise dispose of the
same or to store the same, all at the expense of Licensee; and to
recover from Licensee all fees due under this Agreement had it
not been terminated, less the net amount realized by Licensor
from any such sale, lease, or other disposition.
(b) Without terminating this Agreement, reenter and assume
possession of the space so licensed and of all Devices, fixtures,
and other personal property of Licensee located therein and relet
the space and sell, lease, or otherwise dispose of the Devices,
fixtures, and other personal property, all on such terms and
conditions as Licensor deems advisable, and in any such event,
Licensee shall pay promptly upon demand the difference between
the fees due under this Agreement for the period of such
reletting (but not beyond the term of this Agreement) and the net
amount received by Licensor from such reletting and from such
sale, lease, or other disposition.
(c) To treat all amounts due and not paid by Licensee to the
date of such default, together with all amounts payable under
this Agreement during the remaining term of this Agreement
following such default, as an indebtedness of Licensee
immediately due and payable to Licensor and recover the same,
together with interest thereof at the rate of 150 percent of the
prime rate charged preferred customers by Bank of America Nevada,
determined as of the first day of the month preceding such
default and adjusted as of the first day of each month during the
period of such default, both before and after judgment from the
date of such default until paid, but not to exceed the greater of
24 percent per annum or the highest amount permitted by
applicable law.
In the event of any such default, Licensee shall have no right to
remove any Devices, fixtures, or other personal property of
Licensee from the space licensed, and Licensor shall have a lien
thereon as security for the payment of all amounts due Licensor
under the Agreement.
13. Assignment and Subletting, Successors and Assigns. Licensee
may not assign this Agreement or sublet any of the space within
any of the Licensed Locations covered by this Agreement, whether
by operation of law or otherwise without prior written approval
of Licensor, except that Licensee may assign this Agreement to a
wholly-owned subsidiary of Jackpot Enterprises, Inc. without such
prior written approval; provided, that such assignee agrees to be
bound by all of the terms and conditions of this Agreement and
Licensee guarantees the payment and performance by such assignee
of its obligations hereunder during the remaining term hereof.
Subject to such provision, this Agreement shall bind and its
benefits shall inure to the parties hereto, their successors, and
assigns.
14. Notices and Demands. All notices and demands made pursuant
to this Agreement shall be sufficient if made in writing and
delivered personally or by registered or certified mail to Lucky
Stores, Inc., C/O American Stores Properties, Inc., 0000 Xxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxxxx X.
Xxxxxx, Senior Vice President - Markets West, or to Licensee at
0000 Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000. All notices
mailed shall be deemed given when mailed.
15. Relationship Between the Parties. The relationship of
Licensor and Licensee shall be solely that of licensor and
licensee and nothing herein contained shall be construed to
constitute Licensor and Licensee as landlord and tenant,
sublandlord and subtenant, partners, joint venturers or any other
relationship whatsoever.
16. Confidentiality. This Agreement and the information
contained herein, including but not limited to the fees payable
to Licensor by Licensee, is confidential and shall not be
disclosed to any person except the gaming licensing authorities
of the State of Nevada upon proper request, unless and to the
extent required by laws or regulations applicable to the parties.
17. Prior Agreement. This Agreement shall supersede and
replaces the License Agreement dated October 31, 1991, as
amended, between Licensor and Licensee at the time the initial
term of this Agreement commences on July 1, 1997.
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
LUCKY STORES, INC.
By /s/ Xxxx X. Xxxxxxxxx
_________________________
Xxxx X. Xxxxxxxxx
Vice President
CARDIVAN COMPANY
By /s/ Xxxxxx Xxxxxxx
_________________________
Xxxxxx Xxxxxxx
President
EXHIBIT A TO LICENSE AGREEMENT BETWEEN
LUCKY STORES, INC. AND CARDIVAN COMPANY DATED APRIL 24, 1997
Location No. of Machines Store Hours
________ _______________ ___________
1. Lucky Store No. 121-681
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, XX 15 24 hours
2. Lucky Store No. 121-684
000 X. Xxxxxx Xxxx.
Xxx Xxxxx, XX 16 6 a.m. to 12 a.m.
3. Lucky Store No. 121-685
0000 X. Xxxxxx Xxx. Xxxx
Xxx Xxxxx, XX 15 24 hours
4. Lucky Store No. 121-704
0000 Xxxxx Xxxxxxx
Xxx Xxxxx, XX 15 6 a.m. to 12 a.m.
5. Lucky Store No. 121-732
0000 Xxxx Xxxxxxx
Xxx Xxxxx, XX 17 6 a.m. to 12 a.m.
6. Lucky Store No. 121-733
0000 X. Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 15 24 hours
7. Lucky Store No. 121-734
0000 Xxxx Xxxxxx Xxx
Xxx Xxxxx, XX 15 6 a.m. to 12 a.m.
8. Lucky Store No. 121-735
0000 Xxxxx Xxxxxxx
Xxx Xxxxx, XX 17 6 a.m. to 12 a.m.
9. Lucky Store No. 121-697
0000 X. Xxxx Xxxx Xxxx.
Xxx Xxxxx, XX 15 6 a.m. to 12 a.m.
10. Lucky Store No. 121-739
0000 X. Xxxxxxxx Xx.
Xxx Xxxxx, XX 15 24 hours
11. Lucky Store No. 121-587
0000 X. Xxxxxxxxx
Xxx Xxxxx, XX 15 24 hours
12. Lucky Store No. 121-784
0000 Xxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 15 24 hours
13. Lucky Store No. 121-785
000 Xxxxxxx Xxx.
Xxx Xxxxx, XX 15 24 hours
14. Lucky Store No. 121-786
0000 X. Xxxxxxxxxx
Xxx Xxxxx, XX 17 6 a.m. to 12 a.m.
15. Lucky Store No. 121-787
0000 X. Xxxxxxx Xxxx.
Xxx Xxxxx, XX 20 24 hours
16. Lucky Store No. 121-683
0000 X. Xxxxxxx Xxx.
Xxx Xxxxx, XX 15 24 hours
17. Lucky Store No. 121-585
0000 X. Xxxxxx Xxx. Xx.
Xxx Xxxxx, XX 15 24 hours
18. Lucky Store No. 121-586
0000 X. Xxxxxxx
Xxx Xxxxx, XX 20 24 hours
19. Lucky Store No. 121-687
0000 X. Xxxxxx
Xxx Xxxxx, XX 15 24 hours
20. Lucky Store No. 121-788
0000 X. Xxxx Xxxx
Xxx Xxxxx, XX 15 24 hours
21. Lucky Store No. 121-590
0000 X. Xxxx Xxxxxx
Xxx Xxxxx, XX 15 6 a.m. to 12 a.m.
22. Lucky Store No. 121-589
0000 X. Xxxxxxxx
Xxx Xxxxx, XX 15 24 hours
23. Lucky Store No. 121-721
0000 X. Xxxxxxxxx
Xxx Xxxxx, XX 15 24 hours
24. Lucky Store No. 121-742
0000 X. Xxxxx Xx.
Xxx Xxxxx, XX 15 6 a.m. to 12 a.m.
