Exhibit 10.3
Transaction No. 1201-L-01-01
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT ("Lease" or "Agreement") is made and entered
into as of January 6, 2005, by and between PDS GAMING CORPORATION, a Minnesota
corporation, its successors, designated subsidiaries and assigns ("Lessor") and
ROYAL STAR ENTERTAINMENT, LLC, a Delaware limited liability company ("Lessee").
RECITALS
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor in accordance with the terms and conditions contained herein,
certain equipment more fully described in the Lease Schedule or Schedules,
referred to herein as a "Lease Schedule" or "Lease Schedules", as may from time
to time be executed by Lessee.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and conditions
set forth below and other good and valuable consideration, the receipt and
sufficiency of which all parties acknowledge, it is agreed as follows:
AGREEMENT
1. Recitals Incorporation. The recitals set forth above are hereby
incorporated into this Agreement as material parts thereof and not simply as
mere recitals.
2. Parties.
2.1. The Lessor is PDS GAMING CORPORATION, a Minnesota corporation, whose
address is 0000 Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, XX 00000-0000.
2.2. The Lessee is ROYAL STAR ENTERTAINMENT, LLC, a Delaware limited
liability company, whose address is Xxx Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx
Xxxxx, XX 00000. Lessee's Tax ID Number is 00-0000000 and Lessee's
Organizational ID Number is ___________. Lessee's location for the purposes of
all Uniform Commercial Code filings is the States of Delaware and Florida.
3. Lease. This Lease establishes the general terms and conditions by which
Lessor shall lease the equipment described in each Lease Schedule (the
"Equipment") to Lessee. Each Lease Schedule shall be in the form provided by
Lessor and reasonably acceptable to Lessee and shall incorporate by reference
the terms of this Lease. The Equipment is to be used in connection with that
business described as Royal Star Entertainment, LLC and located on the Maritime
Vessel named the Royal Star (St. Xxxxxxx and Grenadines Official Number 6695 and
IMO Number 8409056) ("Vessel"), to be docked at Port of Palm Beach, Xxx Xxxx
00xx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000.
4. Term, Rent and Payment, Fees and Charges.
4.1. Term. The term of this Lease shall commence on the date set forth in
each Lease Schedule (the "Commencement Date") and continue as specified in such
Lease Schedule ("Term").
4.2. Rent and Payment. Lessee's obligation to pay rent for the Equipment
shall commence on the Commencement Date and continue for the Term. The Basic
Rent, as set forth and defined in the Lease Schedules, shall be payable in such
amount and on such date as set forth in the Lease Schedule. Any amounts payable
by Lessee, other than Basic Rent, shall be deemed Additional Charges. Additional
Charges shall be due and payable in accordance with the terms of the Lease
Schedule or if not set forth therein, on the Basic Rent payment date following
the date upon which the aforesaid Additional Charges accrue, or the last day of
the Term, whichever is earlier. Lessee shall make all payments at the address of
Lessor set forth above or at such other address as Lessor may designate in
writing. As used herein, the term "Rent" shall mean all Basic Rent and
Additional Charges as described in the Lease Schedules.
4.3. Late Charge. If any Basic Rent is not received by Lessor or its
assignees within five (5) days of when due then a late charge on such Rent shall
be due and payable with such Rent in an amount equal to one and one-half percent
(1.5%) of the delinquent Basic Rent, as defined in the Lease Schedule, payable
for each month such Basic Rent remains delinquent, as reimbursement for
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administrative costs and not as a penalty.
4.4. ACH. Lessee shall complete, execute and deliver to Lessor an
Authorization for Automatic Payment form, which authorizes Lessor to deduct
payments of Basic Rent directly from Lessee's checking or savings account at a
specified financial institution in accordance with this Lease and the Lease
Schedules.
4.5. [Intentionally Omitted.]
4.6. [Intentionally Omitted.]
4.7. Documentation Costs, Other Expenses and Charges. In connection with
the closing of each transaction, Lessee also agrees to pay all of Lessor's
out-of-pocket expenses in connection with the closing of each transaction,
including without limitation: [i] documentation costs for this Lease and each
Lease Schedule; [ii] any fees and costs of legal counsel utilized by Lessor
(including in-house counsel); [iii] the costs of site and vessel inspections;
and [iv] all other out-of-pocket expenses incurred by or on behalf of Lessor
4.8. Imposts. In addition to the monthly Basic Rent due in each Lease
Schedule, Lessee agrees to pay and indemnify Lessor for, and hold Lessor
harmless from and against all taxes, assessments, fees and charges (hereinafter
called "Imposts") together with any penalties, fines or interest thereon levied
and imposed by any governmental agency or unit (state, local, federal, domestic
or foreign), regardless of party assessed against: (i) with respect to the Lease
or any Lease Schedule; (ii) upon the Equipment, including without limitation any
"vessel", its value or any interest of Lessor and/or Lessee therein; (iii) upon
or on account of any sale, rental, purchase, ownership, possession, use,
operation, maintenance, delivery or return of the Equipment, or value added
thereto, other than taxes imposed on or measured by the net income or capital of
Lessor. The amount of the Impost shall become Rent to be paid by Lessee within
ten (10) days after Lessor's demand. If any Impost relates to a period during
the Term of a Lease Schedule such Impost shall continue, notwithstanding the
expiration or termination of the Lease or the Lease Schedule, until all such
Imposts are paid in full by Lessee.
4.9. Lessor's Performance of Lessee's Obligations. If Lessee fails to
comply with any of its covenants or obligations herein, Lessor may, at its
option, perform such covenants or obligations on Lessee's behalf without thereby
waiving such conditions or obligations or the failure to comply therewith and
all sums advanced by Lessor in connection therewith shall be repayable by Lessee
as Additional Charges. No such performance shall be deemed to relieve Lessee of
its obligations herein.
5. Certificate of Delivery and Acceptance. Lessee shall deliver to Lessor a
Certificate of Delivery and Acceptance ("Certificate of Acceptance") in the form
provided by the Lessor and reasonably acceptable to Lessee.
6. Net Lease. This Lease including each Lease Schedule is a net lease and
Lessee's obligation to pay all Rent due and the rights of Lessor or its
assignees in, and to, such Rent shall be absolute and unconditional under all
circumstances, notwithstanding: [i] any setoff, abatement, reduction,
counterclaim, recoupment, defense, except the defense of prior payment to the
Lessor in accordance with the Lessor's instructions, or other right which Lessee
may have against Lessor, its assignees, the manufacturer or seller of any of the
Equipment, or any other person for any reason whatsoever, including, without
limitation, any breach by Lessor of this Lease; [ii] any defect in title (other
than defects and exceptions caused by Lessor), condition, operation, fitness for
use, or any damage to or destruction of and of the Equipment, except to the
extent resulting from the gross negligence or willful misconduct of Lessor or
any of its employees, agents or representatives; [iii] any interruption or
cessation of use or possession of the Equipment for any reason, except to the
extent resulting from the gross negligence or willful misconduct of Lessor or
any of its employees, agents or representatives; or [iv] any insolvency,
bankruptcy, reorganization or similar proceedings instituted by or against
Lessee.
7. Grant of Security Interest.
7.1. In order to secure prompt payment of the Rent and all of the other
amounts from time to time outstanding under and with respect to this Lease and
any Lease Schedule, and the performance and observance by Lessee of all the
agreements, covenants and provisions thereof, Lessee hereby grants to Lessor a
first priority security interest in the Equipment (including, without
limitation, all inventory, fixtures or other property comprising the same)
together with all software (embedded therein or otherwise), Intellectual
Property (as defined herein) and general intangibles necessary for the operation
of the Equipment, all additions, attachments, accessions thereto whether or not
furnished by the supplier of the Equipment, all subleases, and security deposits
thereunder, and any and all substitutions, replacements or exchanges for any
such item of Equipment, in each case in which Lessee shall from time to time
acquire an interest, and any and all insurance and/or other proceeds of the
Equipment in and which a security interest is granted hereunder.
7.2. Lessee hereby acknowledges and agrees that to the extent Lessor's
participation in any purchase and lease of an item or items of the Equipment
pursuant to this Lease or any Lease Schedule constitutes a financing of the
purchase of such item or items of
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Equipment, Lessee's repayment of the amounts of such financing shall apply on a
"first-in-first-out" basis so that the portions of the amounts of such financing
used to purchase such item or items of Equipment shall be deemed re-paid in the
chronological order of the use of such amounts to purchase the same.
8. Location, Use, Maintenance, and Inspection.
8.1. Location, Use, Maintenance and Repairs.
8.1.1. Lessee shall keep and use the Equipment on the Premises and shall
not relocate or remove any of the Equipment without the prior, written consent
of Lessor.
8.1.2. Lessee shall at all times and, at its sole cost and expense,
properly use and maintain the Equipment in good operating condition, other than
the normal wear and tear, and make all necessary repairs, alterations and
replacements thereto (collectively, "Repairs"), all of which shall immediately
become the property of Lessor and subject to this Lease.
8.1.3. Lessee shall comply with manufacturer instructions relating to
the Equipment, and any applicable laws and governmental regulations.
8.1.4. Lessee shall pay all reasonable costs and expenses associated
with removal and return of the Equipment.
8.2. Identification and Inspection. Upon request by Lessor, Lessee shall
xxxx each gaming device and related equipment (each a "Unit") conspicuously with
appropriate labels or tags furnished by Lessor and maintain such markings
through the Term to clearly disclose that said Unit is being leased from Lessor.
Subject to Lessee's reasonable security requirements, Lessee shall permit
Lessor's representatives to enter the Premises where any Unit is located to
inspect such Unit upon reasonable notice. Lessor shall comply with Lessee's
access and on board policies prior to boarding of the Premises and while on
board the Premises in accordance with the Charter.
9. Location, Property Rights, and Liens.
9.1. Personal Property. All of the Equipment is personal property and
Lessee shall not affix any of the Equipment to realty so as to change its nature
to a fixture or real property and agrees that all of the Equipment shall remain
personal property during the Term. The Equipment is, and shall at all times
remain removable from the Premises. Lessee agrees that the Equipment is not
essential to the Premises. Lessor expressly retains ownership and title to the
Equipment. Lessee hereby agrees that it shall notify Lessor of any change in
Florida gaming laws or regulations affecting Lessor as a result of its ownership
of the Equipment and assist Lessor in complying with, at Lessee's sole expense,
all of Lessor's obligations as required by the state gaming laws and regulations
regarding maintenance, use, possession and operation of the Equipment. Lessee
hereby authorizes, empowers, and grants a limited power of attorney to Lessor to
record and/or execute and file, on Lessee's behalf, any certificates,
memorandums, statements, refiling, and continuations thereof as Lessor deems
reasonably necessary or advisable to preserve and protect its interest
hereunder. The parties intend to create a lease agreement and the relationship
of lessor and lessee between themselves. Nothing in this Lease shall be
construed or interpreted to create or imply the existence of a finance lease or
installment lease contract. Lessor makes no representation regarding the
treatment of this Lease, the Equipment or the payment of obligations under this
Lease for financial statement reporting or tax purposes.
9.2. Protection of Lessor's Property Rights. Lessor has the right to place
on any part of the Equipment, a medallion or other marker of suitable size
stating in substance [i] that the Equipment is the property of Lessor, and [ii]
that Lessor, to protect its rights, has filed or retains the right to file in
appropriate government offices a UCC Financing Statement covering the Equipment.
Lessee hereby authorizes Lessor to file any and all UCC-1 and/or UCC-3
statements and/or amendments thereto related to this Lease, any Lease Schedule,
and/or the Equipment without Lessee's authentication, to the extent permitted by
applicable law. If directed to do so by Lessor, Lessee will cooperate with
Lessor in preparing and filing such UCC statements and/or amendments thereto.
Lessee hereby agrees that by executing this Lease or any Lease Schedule that the
same shall constitute Lessee's authorization for all UCC statements and/or
amendments thereto related to this Lease, any Lease Schedule and/or the
Equipment.
9.3. Accessions. Lessee agrees that if any part of the Equipment is
physically attached to other personal property that the Equipment shall not lose
its identity and shall constitute an accession. Lessor shall at all times herein
retain its interests in the Equipment and such interest shall continue to be
perfected notwithstanding its becoming an accession.
9.4. Liens and Encumbrances. Unless otherwise provided herein, Lessee shall
not directly or indirectly create, incur or suffer a mortgage, claim, lien,
charge, encumbrance or the legal process of a creditor of Lessee of any kind
upon or against this Lease or any Equipment. Lessee shall at all times protect
and defend, at its own cost and expense, the title of Lessor from and against
such
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mortgages, claims, liens, charges, encumbrances and legal processes of creditors
of Lessee and shall keep all the Equipment free and clear from all such
mortgages, claims, liens, charges, encumbrances and legal processes. If any such
mortgage, claim, lien, charge or encumbrance is incurred, Lessee shall
immediately notify Lessor and shall take all actions required by Lessor to
remove the same. Lessee shall indemnify Lessor against and hold Lessor harmless
from any and all costs, obligations, liabilities, penalties, damages or other
charges and any and all expenses reasonably incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder incurred by Lessee in
connection with or arising from any claims, liens, charges, encumbrances and
legal processes upon or against this Lease or any Equipment.
10. Return of Equipment.
10.1. Duty of Return. At the expiration of any Term or upon termination of
the Lease, unless Lessee exercises its option to purchase the Equipment from
Lessor, Lessee at its expense shall return all of the Equipment to Lessor or its
designee at the Lessor's distribution facility in Las Vegas, Nevada, in
accordance with appropriate gaming laws and regulations and the terms and
conditions of the Lease Schedule. The Equipment shall include all parts,
accessories, attachments, etc. originally delivered to Lessee and shall conform
to all of the manufacturer's specifications and gaming laws and regulations with
respect to normal function, capability, design and condition less normal wear
and tear. The terms "normal wear and tear" includes minor scratches, dents, and
chips to the exterior of the device and wear to the interior components of the
Equipment that is consistent with components of comparably aged machines. Upon
return of the Equipment, Lessee agrees to reimburse Lessor for the full retail
cost of the equipment consisting of gaming devices that is non-functioning or
missing components including, but not limited to, components at the following
indicated reimbursement rate, (i) Door $400.00; (ii) Validator head $550.00;
(iii) Validator Can $245.00; (iv) Monitor $250.00; (v) Circuit Board $420.00;
(vi) Xxxxxx $350.00; (vii) Glass panels $300.00 each.
10.2. Failure to Return. If Lessee fails to return the Equipment or any
portion thereof, as provided above, within fourteen (14) days following
expiration of any Term or termination of the Lease, then Lessee shall either
return the Equipment, replace the Equipment as provided in Section 11.2, or pay
to Lessor the reasonable value thereof.
11. Risk of Loss, Insurance.
11.1. Risk of Loss. Lessee shall bear the risk of all loss or damage to any
Unit or caused by any Unit during the period from the time the Unit is shipped
by Lessor or the Unit's vendor until the time it is returned as provided herein.
11.2. Equipment Replacement. Except as otherwise provided herein, if any
Unit is lost, stolen, destroyed, seized by governmental action or, in Lessee's
opinion or Lessor's opinion, damaged ("Event of Loss"), this Lease shall remain
in full force and effect without abatement of Rent and Lessee shall promptly
replace such Unit at its sole expense with a Unit of equivalent value and
utility, and similar kind and in substantially the same condition as the
replaced Unit immediately prior to the Event of Loss. Title to such replacement
Unit immediately shall vest and remain in Lessor, and such Unit shall be deemed
Equipment under this Lease and the applicable Lease Schedule. Lessor shall cause
to be paid to Lessee or the vendor of the replacement Unit any insurance
proceeds actually received by Lessor as a result of the Event of Loss promptly
upon receipt of such proceeds. Lessee shall promptly notify Lessor of any Event
of Loss and shall provide Lessor with and shall enter into, execute and deliver
such documentation, as Lessor shall reasonably request with respect to the
replacement of any such Unit. Notwithstanding the foregoing, if there occurs an
Event of Loss which constitutes, in Lessee's opinion, an actual or constructive
total loss of all or a substantial portion of the Equipment, then Lessee shall
have the option, exercisable upon written notice to Lessor, to terminate this
Lease and purchase the Equipment in accordance with Section 21.2; provided,
however, that if Lessee opts to purchase the Equipment under Section 21.2, then
any insurance proceeds actually received by Lessor as a result of such Event of
Loss shall be used to offset the amount due from Lessee to Lessor under Section
21.2 and the excess, if any, shall be promptly paid to Lessee.
11.3. Insurance.
11.3.1. Lessee shall obtain and maintain in full force and effect the
following insurance: [i] property and liability insurance on the Premises; [ii]
commercial general liability insurance; [iii] all risk, full replacement cost
property damage insurance on the Equipment (in no event less than the
outstanding balance of the obligations hereunder), and [iv] workers compensation
insurance. Such insurance shall: [i] name Lessor, its parents, subsidiaries,
affiliates and/or assignees, as additional insureds (general liability and
property only) and as first loss payees as their interests may appear (property
only); [ii] provide a waiver of subrogation to Lessor (workers compensation
only); and [iii] provide that the POLICY MAY NOT BE CANCELED OR MATERIALLY
ALTERED WITHOUT THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO LESSOR.
11.3.2. All such insurance required herein shall be placed with
companies having a rating of at least A, Class XII or better by Best's rating
service. Lessee shall maintain the insurance throughout the contract period and
furnish to Lessor until the payment in full of any obligations herein, insurance
certificates of a kind satisfactory to Lessor showing the existence of the
insurance required
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hereunder and premium paid.
12. Lessor's Purchase and Performance. Upon receipt of a Lease Schedule
executed and delivered by Lessor, Lessee shall bear all responsibilities and
perform all material obligations of Lessor, which may arise as a result of any
document or agreement between Lessor and a vendor in connection with the
Equipment to be leased under said Lease Schedule, other than payment of the
purchase price; provided that Lessor has provided materially correct and
complete copies of any and all such documents and agreements to Lessee prior to
the execution of such Lease Schedule.
13. Taxes.
13.1. Taxes. Lessee agrees to report, file, pay promptly when due to the
appropriate taxing authority and indemnify, defend, and hold Lessor harmless
from and against any and all taxes (including gross receipts), assessments,
license fees and other federal, state or local governmental charges of any kind
or nature, together with any penalties, interest or fines related thereto
(collectively, "Taxes") that pertain to the Equipment, its purchase, or this
Lease, except such Taxes based solely upon the net income or capital of Lessor,
including, but not necessarily limited to all property, sales and/or use taxes
levied or assessed regardless of whether such taxes are levied or assessed
against Lessor or Lessee.
13.2. Lessor's Filing of Taxes. Notwithstanding the foregoing, Lessor at
its election may report and file sales and/or use tax reports, which are filed
and paid periodically through the Term, and the amounts so due may be invoiced
to Lessee and payable as specified therein, except if and to the extent Lessee
provides a resale or other sales tax exemption certificate.
14. Indemnification. Except for the negligence or misconduct of Lessor, its
employees or agents and assigns, Lessee hereby assumes liability for and agrees
to indemnify, defend, protect, save and hold harmless the Lessor, its agents,
employees, directors and assignees from and against any and all losses, damages,
injuries, claims, administration of claims, penalties, demands and all expenses,
legal or otherwise (including reasonable attorneys' fees) of whatever kind and
nature arising from (a) the purchase, ownership, use, condition, operation or
maintenance of the Equipment, or (b) any agreement between Lessor and a vendor
(including purchase or sales orders) which was reasonably approved by Lessee, in
each case until the Equipment is returned to Lessor. Any claim, defense, setoff,
or other right of Lessee against any such indemnified party shall not in any way
affect, limit, or diminish Lessee's indemnity obligations hereunder. Each of
Lessor and Lessee shall notify the other party immediately as to any claim,
suit, action, damage, or injury related to the Equipment of which such party has
actual or other notice. Lessee shall, at its own cost and expense, defend any
and all suits within the scope of its indemnification obligation, including
frivolous suits and claims, which may be brought against Lessor and shall
satisfy, pay and discharge any and all judgments and fines that may be recovered
against Lessor in any such action or actions, provided, however, that Lessor
shall give Lessee written notice of any such claim or demand. Lessee agrees that
its obligations under this section shall survive the expiration or termination
of this Lease.
15. Representations, Warranties and Covenants. Lessee hereby represents and
warrants to Lessor that:
15.1. It is an entity duly organized, validly existing and in good standing
under the laws of the state of its formation;
15.2. Lessee's true legal name is as set forth in this Agreement and that
is shall not change its name or jurisdiction of organization without thirty (30)
days' written notice to Lessor;
15.3. It has the power and authority to execute, deliver and perform this
Agreement and other instruments and documents required or contemplated herein;
15.4. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of Lessee, does not and will
not require the approval of any other interested parties of Lessee and does not
and will not contravene any Certificate or Articles of formation or internal
by-laws or agreement of Lessee, and does not constitute a default of any
indenture, contract, agreement, mortgage, deed of trust, document or instrument
to which Lessee is a party or by which Lessee is bound;
15.5. The person(s) executing this Agreement on behalf of Lessee has or
have been properly authorized to execute the same;
15.6. Lessee has obtained, maintains, and will maintain, on an active and
current basis, all licenses, permits, registrations, approvals and other
authority as may be required from any applicable federal, state, tribal and
local governments and agencies having jurisdiction over it and the subject
matter of this Agreement;
15.7. There are no suits, actions, proceedings or investigations pending
or, to Lessee's knowledge, threatened or, to Lessee's knowledge, any basis
therefor which might materially adversely affect the ability of it to perform
its obligations under this Agreement or have a material adverse effect upon the
financial condition of it or the validity or enforceability of this Agreement;
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15.8. Lessee is not currently the subject of any pending or threatened
bankruptcy or insolvency proceeding;
15.9. Lessee is not presently insolvent and this Agreement will not render
Lessee insolvent. As used in this section, the term "insolvent" means that the
sum total of all of Lessee's liabilities (whether secured or unsecured,
contingent or fixed, or liquidated or unliquidated) is in excess of the value of
Lessee's non-exempt assets (i.e. all of the assets of the entity that are
available to satisfy claims of creditors);
15.10. As of the date hereof, its obligations under this Agreement are not
subject to any defense, set off or counterclaim;
15.11. Lessee is not currently aware of any event, condition, fact or
circumstance, which, after the execution of this Agreement, would prevent Lessee
from having sufficient working capital to pay all of Lessee's debts as they
become due;
15.12. This Agreement constitutes the valid and legally binding agreement
of Lessee and is enforceable against Lessee in accordance with its terms, except
to the extent that enforcement of any remedies may be limited by applicable
bankruptcy, insolvency, general principles of equity or other similar laws
affecting generally the enforcement of creditor's remedies;
15.13. There have been no amendments, modifications, waivers or releases
with respect to this Agreement or any provisions hereof, whether oral or written
prior to execution hereof;
15.14. The Lessee's state of formation and/or the location of the Premises
will not be changed without thirty (30) days' prior written notice to Lessor;
and
15.15. No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any
governmental, regulatory or public or tribal body or authority is required in
connection with Lessee's execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of this Agreement.
15.16. All financial statements concerning the Lessee and its guarantors
that have been delivered as of the date of this Agreement have been prepared in
accordance with GAAP consistently applied throughout the periods covered (except
as disclosed therein and except, with respect to unaudited financial statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial position of the persons and
entities covered thereby as at the dates thereof and the results of such
person's or entities operations and cash flows for the periods then ended. Any
projections delivered to Lessor on or prior to the date of this Agreement have
been prepared by Lessee in light of the past operations of its businesses. Such
projections are based upon estimates and assumptions stated therein, all of
which Lessee believes to be reasonable and fair in light of current conditions
and current facts known to Lessee and, as of the date of this Agreement, reflect
Lessee's good faith and reasonable estimates of the future financial performance
of Lessee, the Vessel, the casino gaming operations and of the other information
projected therein for the period set forth therein.
15.17. Between the date of Lessee's most recent annual financial statements
and the date of this Agreement, (a) Lessee has not incurred any obligations,
contingent or non-contingent liabilities, liabilities for charges, long-term
leases or unusual forward or long-term commitments which are not reflected in
the financial statements provided to Lessor and which, alone or in the
aggregate, could reasonably be expected to have a material adverse effect on the
financial condition of Lessee or Lessee's ability to perform its obligations
under this Lease or any related documents ("Material Adverse Effect"), (b) no
contract, lease or other agreement or instrument has been entered into by any
Lessee or has become binding upon any Lessee's assets and no law or regulation
applicable to any Lessee has been adopted which has had or could reasonably be
expected to have a Material Adverse Effect, and (c) no Lessee is in default and
to the best of any Lessee's knowledge no third party is in default under any
contract, lease or other agreement or instrument, which alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Between the date of Lessee's most recent annual financial statements and the
date of this Agreement, no event has occurred which, alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.
15.18. As of the date of this Agreement (a) no strikes or other material
labor disputes against any Lessee are pending or, to any Lessee's knowledge,
threatened, (b) hours worked by and payment made to employees of each Lessee
comply with all federal, state, local or foreign law applicable to such matter,
(c) all payments due from any Lessee for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Lessee, (d) there
is no organizing activity involving any Lessee pending or, to any Lessee's
knowledge, threatened by any labor union or group of employees, (e) there are no
representation proceedings pending or, to any Lessee's knowledge, threatened
with the National Labor Relations Board, and no labor organization or group of
employees of any Lessee has made a pending demand for recognition, and (f) there
are no complaints or charges against any Lessee pending or, to the knowledge of
any Lessee, threatened to be filed with any governmental authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by and Lessee of any individual.
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15.19. As of the Closing Date, each Lessee owns or has rights to use all
trademarks, service marks, records, technology, inventions, know-how,
specifications, modifications, information, and any other intellectual property
necessary to continue to conduct its business as now or heretofore conducted by
it or proposed to be conducted by it ("Intellectual Property"). Each Lessee
conducts its business and affairs without infringement of or interference with
any Intellectual Property of any other person or entity in any material respect.
No Lessee is aware of any infringement claim by any other person or entity with
respect to any Intellectual Property.
15.20. As of the date of this Agreement, no Lessee is a party to any
contract or agreement with any governmental authority and no Lessee's accounts
(as defined in the United States Code) are subject to the Federal Assignment of
Claims Act (31 U.S.C. Section 3727), as amended, or any similar state or local
law.
15.21. No information contained in this Agreement, any projections,
financial statements, or SEC filings or other reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Lessee to Lessor contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
15.22. Lessee shall not directly or indirectly, by operation of law or
otherwise merge, consolidate or otherwise combine with any sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation
or other entity (any of the foregoing, a "Person"), other than with another
direct or indirect subsidiary of International Thoroughbred Breeders, Inc.,
without Lessor's prior written consent, such consent not to be unreasonably
withheld.
16. Warranty, Disclaimers and Limitations of Liability.
16.1. Pre-owned Gaming Devices. All pre-owned gaming devices supplied
herein by Lessor, which are subject to this Lease or any Lease Schedule, if any,
are leased in a functional condition. Lessor warrants that pre-owned gaming
devices will be mechanically sound and in good working order for a period of
thirty (30) days following the physical delivery and installation. Lessee's sole
and exclusive remedy in the event of defect of a pre-owned gaming device is
expressly limited to the restoration of the device to good working condition by
adjustment, repair or replacement of defective parts, at Lessee's election.
There are no other warranties, express or implied, including, but not limited
to, warranties of merchantability or fitness for a particular purpose. No
affirmation of fact, including, but not limited to, statements regarding
suitability for use or performance of such Equipment shall be deemed to be a
warranty of Lessor for any purpose. The Lessee will bear the cost of returning
any defective pre-owned gaming devices to Lessor, including shipping and
reasonable packaging. Lessor will bear the cost of returning the repaired or
replacement device to the Lessee, including shipping and reasonable packaging.
Repair of damage caused by the Lessee's negligence or intent, or damage caused
by third parties is the responsibility of the Lessee and shall in no event be
the responsibility of Lessor.
16.2. New Gaming Devices or Equipment. Lessor makes no warranties, express
or implied, including, but not limited to, warranties of merchantability or
fitness for a particular purpose with regard to any new gaming devices or
equipment acquired by Lessor for lease to Lessee hereunder from an Original
Equipment Manufacturer or Supplier ("OEM"). No affirmation of fact, including,
but not limited to, statements regarding suitability for use or performance of
such Equipment shall be deemed to be a warranty of Lessor for any purpose. All
OEM warranties, if any, shall extend to Lessee, subject to the terms and
conditions of said OEM warranty and to the extent as it may apply to any
Equipment leased herein and, upon the request of Lessee, Lessor shall cooperate
with Lessee to enforce any OEM warranty.
16.3. Disclaimer and Limitations of Liability. Notwithstanding anything
herein to the contrary, Lessor shall not be responsible or liable for any
revenues foregone by the Lessee, while any part of the Equipment is not
functioning properly. Lessor shall also not be responsible or liable for any
losses, damages, injuries, claims, penalties, demands and all expenses, legal or
otherwise (including reasonable attorneys' fees) of whatever kind and nature
arising from any patron disputes involving such Equipment. The liability of
Lessor for any of the Equipment leased hereunder, whether in contract, in tort,
under warranty, in negligence or otherwise, shall not exceed the fair market
value of the Equipment itself and under no circumstances shall Lessor be liable
for direct, special, indirect, or consequential damages. Any unauthorized
modification, alteration, or revision of all or any portion of the Equipment
shall cause the warranty described above to be null and void. Lessor, its
affiliates, subsidiaries, representatives, and agents make no other warranty,
express or implied. IN NO EVENT SHALL LESSOR BE LIABLE FOR DIRECT, INDIRECT,
SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OF PROFITS,
ARISING OUT OF THIS LEASE OR ANY LEASE SCHEDULE REGARDLESS OF THE NATURE OF ANY
CLAIM MADE BY LESSEE, BUT EXCLUDING DIRECT DAMAGES RESULTING FROM LESSOR'S
BREACH OF SECTION 16.4.
16.4. Covenant of Lessor. Lessor hereby covenants and agrees that Lessor
will not permit or suffer to exist any lien, claim, liability or other
encumbrance on or against the Equipment by, to or of any person or entity
claiming through Lessor, which
7
impairs Lessee's rights to quiet enjoyment or purchase option under this Lease,
except to the extent attributable to any Event of Default by Lessee. Lessor
shall and shall be entitled to a reasonable opportunity to cure, contest or
defend against any such lien, claim, liability or other encumbrance.
16.5. Representations and Warranties of Lessor. Lessor hereby represents
and warrants to Lessee that:
16.5.1. It is an entity duly organized, validly existing and in good
standing under the laws of the state of its formation;
16.5.2. It has the power and authority to execute, deliver and perform
this Agreement and other instruments and documents required or contemplated
herein;
16.5.3. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of Lessor, does not and
will not require the approval of any other interested parties of Lessor and does
not and will not contravene any Certificate or Articles of formation or internal
by-laws or agreement of Lessor, and does not constitute a material default of
any indenture, contract, agreement, mortgage, deed of trust, document or
instrument to which Lessor is a party or by which Lessor is bound;
16.5.4. The person(s) executing this Agreement on behalf of Lessor has
or have been properly authorized to execute the same;
16.5.5. This Agreement constitutes the valid and legally binding
agreement of Lessor and is enforceable against Lessor in accordance with its
terms, except to the extent that enforcement of any remedies may be limited by
applicable bankruptcy, insolvency, general principles of equity or other similar
laws affecting generally the enforcement of creditor's remedies;
16.5.6. Lessor has obtained, maintains, and will maintain, on an active
and current basis, all licenses, permits, registrations, approvals and other
authority as may be required from any applicable federal, state, tribal and
local governments and agencies having jurisdiction over it with respect to the
subject matter of this Agreement, except to the extent that the failure to
obtain and/or maintain any such licenses could not reasonably be expected to
have a material adverse affect on the ability of Lessor to perform its
obligations hereunder;
16.5.7. There are no suits, actions, proceedings or investigations
pending or, to Lessor's knowledge, threatened or, to Lessor's knowledge, any
basis therefor which might materially adversely affect the ability of it to
perform its obligations under this Agreement or have a material adverse effect
upon the financial condition of it or the validity or enforceability of this
Agreement; and
16.5.8. To the knowledge of Lessor, no order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental, regulatory or public or tribal body or
authority is required in connection with the execution, delivery and performance
of, or the legality, validity, binding effect or enforceability of this
Agreement.
17. Assignment of Lease. Lessee acknowledges and agrees that Lessor may
assign, mortgage, or otherwise transfer its interest thereunder and/or in the
Equipment to others ("Assignees") without any consent of Lessee, provided
however that Lessee shall be notified of any assignment. Accordingly, Lessee and
Lessor agree that upon such assignment, Lessee (i) shall acknowledge such
assignment in writing by executing a Notice, Consent and Acknowledgment of
Assignment furnished by Lessor; (ii) shall promptly pay all Rent when due to the
designated Assignees, notwithstanding any defense, setoff, abatement,
recoupment, reduction or counterclaim whatsoever that Lessee may have against
Lessor; (iii) shall not permit the Lease or Lease Schedule so assigned to be
amended or the terms thereof waived without the prior written consent of the
Assignees; (iv) shall not require the Assignees to perform any obligations of
Lessor under such Lease Schedule; (v) shall not terminate or attempt to
terminate the Lease or Lease Schedule on account of any default by Lessor; and
(vi) acknowledges that any Assignee may reassign its rights and interest with
the same force and effect as the assignment described herein. Lessee shall not
assign this Lease or any Lease Schedule or assign its rights in or sublet the
Equipment, or any interest therein without Lessor's and its Assignee's prior
written consent, which consent shall not be unreasonably withheld.
18. Financial Information, Lease Agreement.
18.1. Financial Information. Lessee will provide Lessor monthly financial
statements within thirty (30) days of each calendar month and annual audited
consolidated financial statements, as provided by parent corporation, within
ninety (90) days of fiscal year-end. Throughout the Term, upon the reasonable
request of Lessor, Lessee shall deliver to Lessor copies of other current
financial information of Lessee and any parent entity of Lessee, which will
reflect the financial condition and operations of Lessee as well as such other
information regarding Lessee reasonably requested by Lessor or its Assignees.
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18.2. Books and Records; Account Information. Lessee shall keep adequate
books and records with respect to its business activities in which proper
entries, reflecting all financial transactions, are made in accordance with GAAP
and on a basis consistent with the financial statements delivered by Lessee and
its affiliates as of the date of this Agreement
18.3. Lease Agreement. If any court of competent jurisdiction should
determine that this Lease constitutes a security arrangement as opposed to a
true lease, the parties then agree that this Lease shall constitute a security
agreement within the meaning of the Uniform Commercial Code and that the Lessor
shall be considered a secured party under the provisions thereof and shall be
entitled to all the rights and remedies of a secured party and Lessee, as
debtor, grants to Lessor, as secured party, a security interest in the
Equipment; provided nothing herein shall be construed nor shall the inclusion of
this paragraph be interpreted as derogating from the stated intent and
contractual understanding of the parties that this is a true lease.
19. Default by Lessee. Lessee shall be deemed in default under this Agreement
upon the occurrence of any one of the following events ("Event of Default"):
19.1. Failure to make any payment of Basic Rent within ten (10) days of
when due under this Agreement or any Lease Schedule by its due date;
19.2. Lessee's cancellation, termination, alteration, or rescission of the
Authorization for Automatic Payment without the prior approval of Lessor;
19.3. Lessee's rejection of any authorized withdrawal, payment or entry
permitted by the Authorization for Automatic Payment;
19.4. Failure to perform in any material respect any other obligation under
this Agreement, any Lease Schedule or any other written agreement between Lessee
and Lessor, regardless of whether such other agreement, lease or charter covers
the same or similar maritime vessel or gaming equipment, within thirty (30) days
after receipt of written notice of default and failure to cure; provided,
however, that no notice shall be required where a breach or threatened breach
would cause irreparable harm to Lessor and Lessor may immediately seek equitable
relief in a court of competent jurisdiction to enjoin such breach;
19.5. Lessee shall generally fail to pay its debts as they become due,
shall make an assignment for the benefit of its creditors, shall admit in
writing its inability to pay its debts as they become due, shall file a petition
under any chapter of the Federal Bankruptcy Code or any similar law, state or
federal, now or hereafter existing, shall become "insolvent" as that term is
generally defined under the Federal Bankruptcy Code, shall in any involuntary
bankruptcy case commenced against it file an answer admitting insolvency or
inability to pay its debts as they become due, or shall fail to obtain a
dismissal of such case within one hundred twenty (120) days after its
commencement or convert the case from one chapter of the Federal Bankruptcy Code
to another chapter, or be the subject of an order for relief in such bankruptcy
case, or be adjudged a bankrupt or insolvent, or shall have a custodian, trustee
or receiver appointed for, or have any court take jurisdiction of its property,
or any part thereof, in any proceeding for the purpose of reorganization,
arrangement, dissolution or liquidation, and such custodian, trustee or receiver
shall not be discharged, or such jurisdiction shall not be relinquished, vacated
or stayed within sixty (60) days of the appointment;
19.6. Lessee shall be dissolved, liquidated or wound up or is enjoined,
restrained, fails or is in any way prevented from maintaining its existence as a
going concern in good standing (excepting, however, reorganizations,
consolidations and/or mergers into or with, and sales to, affiliates owned by,
owning or under common control of or with Lessee and reorganizations,
consolidations and/or mergers resulting from the death of Xxxxxxx X. Xxxxxx);
19.7. Lessee attempts to remove, sell, transfer, encumber, part with
possession or sublet any part of the Equipment without the prior written consent
of Lessor other than in the ordinary course of business;
19.8. Any part of the Equipment is lost, stolen, materially changed or
destroyed, and is not replaced by Lessee within a reasonable period of time;
19.9. Any part of the Equipment is attached, levied upon, encumbered,
pledged, or seized under any judicial process, unless attributable to the acts
or debts of Lessor;
19.10. Any warranty or representation made or furnished to Lessor by or on
behalf of Lessee in this Lease or any Lease Schedule is false or misleading in
any material respect when made or furnished;
19.11. Failure of Lessee to maintain in full force and effect the licenses,
permits and certifications that may be required under any applicable gaming laws
for the operation of Lessee 's business;
9
19.12. The revocation of any gaming license of Lessee;
19.13. The denial of any gaming license application of Lessee;
19.14. Failure of Lessee to comply with all applicable gaming statutes and
regulations;
19.15. Failure of Lessee to maintain the insurance required by this
Agreement; and/or
19.16. Any merger, consolidation, sale, change in control or any transfer
of a majority of Lessee's business or assets, without Lessor's prior written
consent, such consent not to be unreasonably withheld.
20. Lessor Remedies.
20.1. Lessee acknowledges that the enforcement of this Agreement may
require approval of certain regulatory authorities and copies of all Default
Notices, legal proceedings, etc. will be forwarded to the appropriate agency as
required by state law or regulation. Lessee further acknowledges that if any
Event of Default occurs and is continuing after the expiration of any applicable
cure period, Lessor may, in addition to any and all rights and remedies it may
have at law or in equity, without notice to or demand upon any party to this
Agreement and at its sole option, terminate this Lease and all Lease Schedules
and thereafter, if Lessor has not received notice from Lessee pursuant to
Section 21.2 of its intent to exercise its option thereunder or, if such notice
is received but Lessee does not consummate the purchase within sixty (60) days:
20.1.1. Declare all amounts remaining unpaid under this Agreement,
including without limitation the Termination Value as defined in Section 21.2,
immediately due and payable and interest shall accrue on any outstanding balance
due Lessor at a rate of 3% per annum, until paid in full;
20.1.2. Proceed by appropriate court action or other proceeding, either
at law or in equity to enforce performance by Lessee of any and all covenants of
this Agreement;
20.1.3. Enter onto Lessee's premises or the Premises in person or by
agent and take possession of the Equipment;
20.1.4. Require Lessee to return the Equipment, at Lessee's expense, to
a place reasonably designated by Lessor;
20.1.5. Render the Equipment unusable in such manner as is reasonable
under the circumstances and as may be allowed by applicable law;
20.1.6. Dispose of the Equipment in a commercially reasonable manner, as
Lessor in the good faith exercise of its discretion deems necessary or
appropriate;
20.1.7. Without demand, advertisement or notice of any kind (except such
notice as may be required under Article 9 of the Uniform Commercial Code, and
all of which are, to the extent permitted by law, hereby expressly waived),
sell, resell, lease, re-lease or dispose of the Equipment in any commercially
reasonable manner;
20.1.8. If not already the property of Lessor, purchase the Equipment at
public sale with credit on any amounts owed;
20.1.9. If not already the property of Lessor, purchase the Equipment at
private sale for a price and on such terms as is determined by an independent
appraiser appointed by Lessor to be the price and terms at which a willing
seller would be ready to sell to an able buyer;
20.1.10. Proceed immediately to exercise each and all of the powers,
rights, and privileges reserved or granted to Lessor under this Agreement;
20.1.11. Subject to applicable and appropriate gaming laws, rules, laws
and regulations, and required approvals, take possession, sell and/or re-lease
any unit of the Equipment as Lessor may desire, in its sole discretion without
demand or notice, wherever the same may be located, without any court order or
pre-taking hearing, any and all damages occasioned by such retaking being
specifically waived herein by Lessee;
20.1.12. Take control of any and all proceeds to which Lessee is
entitled;
20.1.13. Exercise any other remedies available to a Lessor under the
Uniform Commercial Code, if applicable;
20.1.14. Immediately seek equitable relief in a court of competent
jurisdiction to enjoin a breach of this Agreement
10
where said breach or threatened breach would cause irreparable harm to Lessor;
and/or
20.1.15. Exercise any other rights or remedies provided or available to
Lessor at law or in equity.
20.2. Notwithstanding anything to the contrary contained in this Lease and
notwithstanding that this transaction shall constitute an operating lease,
Lessor and Lessee agree that the respective rights, remedies and obligations of
the parties following an Event of Default shall be subject to Article 9 of the
Uniform Commercial Code ("UCC") as in effect in the State of Nevada, the same as
if the Lessor were a secured party, even if Article 9 would not otherwise be
applicable. Without limiting the generality of the foregoing, any public or
private sale, lease or other disposition of the Equipment shall comply with
Section 9-610 of the UCC, and distribution of proceeds of sale, lease or other
disposition, including without limitation application of surplus proceeds, shall
be in accordance with Section 9-608 of the UCC. Lessor further agrees that any
public or private sale, lease or other disposition of the Equipment to any party
other than Lessee shall occur at least forty-five (45) days after the date such
Event of Default first occurred.
20.3. With respect to any exercise by Lessor of its right to recover and/or
dispose of the Equipment under this Lease or any Lease Schedule, Lessee
acknowledges and agrees as follows: (i) Lessor shall have no obligation, subject
to the requirements of commercial reasonableness, to clean-up or otherwise
prepare the Equipment for disposition, (ii) Lessor may comply with any
applicable state or federal law requirements in connection with any disposition
of the Equipment and any actions taken in connection therewith shall not be
deemed to have adversely affected the commercial reasonableness of any
disposition of such Equipment, (iii) If Lessor purchases any of the Equipment at
public or private sale, Lessor may pay for the same by crediting some or all of
Lessee's obligations under this Lease or any Lease Schedule.
20.4. No waiver by Lessor, its affiliates, successors or assigns, of any
default, including, but not limited to, acceptance of late payment after the
same is due, shall operate as a waiver of any other default or of the same
default on a future occasion. In the Event of Default, Lessor shall be entitled
to recover all costs, expenses, losses, damages and legal costs (including
reasonable attorneys' fees) reasonably incurred by Lessor in connection with the
enforcement of Lessor's remedies. All rights and remedies of Lessor are
cumulative and are in addition to any other remedies provided for at law or in
equity, including the Uniform Commercial Code, if applicable, and may, to the
extent permitted by law, be exercised concurrently or separately. A termination
hereunder shall occur only upon written notice by Lessor to Lessee and no
repossession or other act by Lessor after default shall relieve Lessee from any
of its obligations to Lessor hereunder unless Lessor so notifies Lessee in
writing.
20.5. In the event of a default by Lessee, Lessor may, at its option,
declare this Agreement terminated without further liability or obligation to
Lessee other than as provided in Section 21.2.
21. Compliance with Governmental Agencies.
21.1. All services furnished hereunder shall comply with the requirements
of all governmental authorities having jurisdiction (the "Authorities"). The
terms and conditions of the Lease or any Lease Schedule shall be subject to the
approval by the Authorities, if such approval is so required. Lessee agrees to
comply with all material requirements of every governmental authority which has
jurisdiction over the Lease or any Lease Schedule. It is understood that, if at
any time either prior to or subsequent to the initial starting date of the Lease
or any Lease Schedule, the Authorities shall render a final determination either
disapproving the terms and conditions of the Lease or any Lease Schedule or
denying the application of Lessor for a gaming license, vendor registration or
casino service supplier, as a result, directly or indirectly, of this Lease or
the acts or omissions of Lessee, or the acts, omissions or identity of persons
or entities affiliated with Lessee, or if Lessor already has such a license, the
qualifications of Lessor that then, in either of such events, the Lease or any
lease schedule shall be deemed terminated, as of the date of such disapproval or
denial, as though such date were the date originally fixed herein for the notice
of termination of the Lease or any lease schedule.
21.2. If the Lease or any Lease Schedule is terminated for any reason prior
to expiration of the Term (including, without limitation, as a result of an
Event of Default), then Lessee shall have the option to purchase the Equipment
by providing written notice to Lessor within ten (10) days after termination and
tendering payment to Lessor within sixty (60) days after termination of (i) any
amounts then due and owing under the Lease and any lease schedule, including but
not limited to such items as rent, late charges, and taxes paid by or assessed
upon Lessor, and (ii) the amount equal to the Termination Value, as defined
below, and Lessor shall transfer title to the Equipment to Lessee and in that
event the parties hereto shall have no further liability to each other.
Termination Value shall be defined as the net present value of the remaining
rentals due, including the purchase option amount less any prepayments thereof,
discounted at the original all-in yield, for each Lease Schedule.
22. Waiver of Jury Trial. The parties hereby knowingly and voluntarily waive
their right to a jury trial on any claim or cause of action based upon or
arising out of, directly or indirectly, this Lease or any Lease Schedules, any
dealings between the parties relating to the subject matter hereof or thereof,
and/or the relationship that is being established between the parties. The scope
of this waiver is intended to be all encompassing of any and all disputes that
may be filed in any court (including, without limitation,
11
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims). This waiver may not be modified orally, and the waiver
shall apply to any subsequent amendment, renewals, supplement or modifications
to this Lease. In the event of litigation, this Lease may be filed as a written
consent to a trial by the court.
23. Miscellaneous.
23.1. Amendments or Modifications. This Lease shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
23.2. Binding Effect. This Lease shall be binding upon and inure to the
benefit of the parties and their respective, permitted successors, heirs,
executors, administrators, assigns, and all persons claiming by, through or
under them.
23.3. Captions, Headings and Titles. The captions, headings and titles of
the various sections of this Lease are for convenience only and are not to be
construed as confining or limiting in any way the scope or intent of the parties
or the provisions hereof. Whenever the context requires or permits, the singular
shall include the plural, the plural shall include the singular and the
masculine, feminine and neuter shall be freely interchangeable.
23.4. Compliance with All Laws. Neither party shall violate any law or
regulation including, without limitation, any gaming law or regulation or to
engage in any act or omission which tends to bring discredit upon the gaming
industry or otherwise jeopardizes the other party's ability to engage in
business with businesses licensed by any applicable regulatory authorities. Each
party shall use its good faith judgment in determining whether any such
violation, act or omission of the other party or its directors, officers or
managers, if any, places such party's business or licenses at risk and upon such
determination such party shall have the right to immediately terminate this
Lease or any Lease Schedule without further liability to the other party, other
than as provided in Section 21.2.
23.5. Conduct. Lessee acknowledges that Lessor, its subsidiaries and
affiliates, have a positive reputation in the finance and gaming industry and
that Lessor and its subsidiaries and affiliates are subject to regulation and
licensing and desire to maintain their reputation and receive positive
publicity. Lessee therefore agrees that throughout the Term, Lessee`s directors,
officers and managers will not conduct themselves in any manner that materially
adversely affects or is detrimental to, Lessor, its subsidiaries or affiliates,
and will not directly or indirectly make any oral, written or recorded private
or public statement or comment that is disparaging, critical or defamatory of
Lessor or its subsidiaries or affiliates. Lessor shall use its good faith
business judgment in determining whether the conduct of Lessee`s directors,
officers or managers materially adversely affects Lessor, its subsidiaries or
affiliates, and upon such determination Lessor shall have the right to
immediately terminate this Lease or any Lease Schedules without further
liability to Lessee.
23.6. Confidentiality. Lessor and Lessee and their respective employees
shall keep all statistical, financial, confidential, and/or personal data with
respect to the other party requested, received, developed, stored or viewed by
Lessor or Lessee in connection with this Agreement in the strictest confidence.
Lessor and Lessee agree not to divulge to third parties, without the written
consent of the other party, any such information unless: [i] the information is
known to the disclosing party prior to obtaining the same; [ii] the information
is, at the time of disclosure by the disclosing party, then in the public
domain; [iii] the information is obtained by the disclosing party from a third
party who did not receive same, directly or indirectly from the disclosing party
and who has no obligation of secrecy with respect thereto; or [iv] the
disclosing party is obligated to divulge the information to a governmental or
regulatory authority having competent jurisdiction over the disclosing party or
its business, provided that in such event the disclosing party shall provide the
other party with prior written notice and upon the non-disclosing party's
request cooperate with such party to prevent such disclosure.
23.7. Counterparts. This Lease may be executed in as many counterparts as
may be deemed necessary and convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed or otherwise
authenticated, shall be deemed to be an original, but all such counterparts
together shall constitute but one and the same document.
23.8. Effective Only Upon Execution by Authorized Officer. Neither this
Lease nor any Lease Schedule shall be deemed to constitute an offer or be
binding upon Lessor or Lessee until executed by their respective authorized
officers. No representations made by any Lessor's salespersons or anyone else
shall be binding unless incorporated herein in writing.
23.9. Entire Agreement. This Lease along with any Lease Schedules and
related instruments executed in connection therewith constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, negotiations, representations or
understandings, whether written or oral, between the parties hereto relating to
the subject matter of this Lease or any Lease Schedules. Any prior agreements,
promises, negotiations, representations or understandings, either oral or
written, not expressly set forth in this Lease, any Lease Schedule, or related
instruments executed in
12
connection therewith shall no force or effect.
23.10. Further Assurances. The parties further covenant and agree to do,
execute and deliver, or cause to be done, executed and delivered, and covenant
and agree to use their best efforts to cause their successors and assigns to do,
execute and deliver, or cause to be done, executed and delivered, all such
further acts, transfers and assurances, for implementing the intention of the
parties under this Agreement, as the parties reasonably shall request. The
parties agree to execute any additional instruments or agreements necessary to
carry out the intent of this Lease.
23.11. Governing Law. The substantive and procedural laws of the State of
Nevada shall govern the validity, construction, interpretation, performance and
enforcement of this Agreement and the parties agree to jurisdiction in Nevada
without reference to its conflict of laws provisions regardless of the location
of the Equipment. The parties also hereby agree that any action and/or
proceeding in connection with this Agreement shall only be brought in the venue
of Xxxxx County, Nevada.
23.12. Governing Law (Sovereign Nations Only). In the event that Lessee is
an Indian Tribe as defined by the Indian Gaming Regulatory Act, 25 U.S.C.
ss.2701 et seq. or a sovereign nation, the parties agree that the immediate
section above shall be null and void and Lessee hereby grants a limited waiver
of its Sovereign Immunity, for the sole benefit of Lessor, such waiver being
limited to actions or claims by Lessor against Lessee, or by Lessee against
Lessor, which shall arise directly from, or are related to, this Agreement. Any
action brought by or against Lessor may be brought only in the United States
District Court most near Lessee`s primary place of business regardless of the
location of the Equipment. The law to be applied by said United States District
Court in any such action shall be the law of the State of Nevada, including the
Uniform Commercial Code, as adopted by the State of Nevada, without reference to
any Nevada choice of law provisions. Without in any way limiting the generality
of the foregoing, Lessee expressly authorizes any governmental or other agency
authorities who have the right and duty under applicable law to take any and all
action authorized or ordered by any court, including without limitation,
entering the land of Lessee and repossessing the Equipment or otherwise giving
effect to any judgment entered. It is the intent of the parties that Lessor will
be able to obtain possession of the Equipment in accordance with the rights
afforded it under applicable laws and/or any court order.
23.13. Governmental Regulations. Notwithstanding anything in this Lease or
any Lease Schedule to the contrary, in the event any federal, state, local or
other governmental body's statutes, laws, rules, or regulations are
enacted/promulgated, the impact of which will materially impact the methods
and/or costs of Lessor under this Lease or any Lease Schedule, then, in that
event, Lessor, upon written notice to Lessee, may request a renegotiation of
this Lease or any Lease Schedule. Any modifications to this Lease or any Lease
Schedule resulting from such renegotiation shall become effective on the latest
date as permitted by the governmental body. In the event the parties are unable
to reach a satisfactory agreement during said renegotiations, Lessor shall have
the right to cancel the Lease and all Lease Schedules at any time by not less
than 60 days prior written notice to Lessee, whereupon the Lease and all Lease
Schedules shall be null and void and Lessee shall have the rights described in
Section 21.2.
23.14. Independence of Parties. All persons hired or employed by each party
in the discharge of this Lease shall be considered employees of that party and
not of any other party to this Lease and shall be solely and exclusively under
the hiring or employing party's direction and control. Neither party nor any of
its employees [i] shall be held or deemed in any way to be an agent, employee or
official of the other party, or [ii] shall have the authority to bind the other
party in any manner whatsoever. Each party further agrees to have all persons
employed by it properly covered by worker's compensation or employer's liability
insurance, as required by law and to assume and pay at its own cost all taxes
and contributions required by an employer under any and all unemployment
insurance, old age pensions, and other applicable so-called Social Security
Acts.
23.15. Intellectual Property Rights not conveyed. Nothing in this Lease
shall be construed as to grant or convey to Lessee any right, title or interest
in and to any intellectual property rights (including software, patent,
copyright and/or trademark) to any part of the Equipment.
23.16. Lease Irrevocable. This Lease is irrevocable for the full Term
hereof and the Rent shall not xxxxx by reason of termination of Lessee's right
of possession and/or the taking of possession by the Lessor or for any other
reason; provided, however, that nothing in this Section 23.16 shall be construed
as limiting Lessor's or Lessee's right to terminate this Lease and/or any Lease
Schedule prior to the expiration of the Term in accordance with the provisions
of this Lease and the Lease Schedules.
23.17. License and Permits. Each party shall obtain and maintain on an
active and current basis, all licenses, permits, registrations, approvals and
other authority as may be required from any applicable federal, state, tribal
and local governments and agencies having jurisdiction over the subject matter
of this Lease and any Lease Schedule.
23.18. Multiple Second Parties. If more than one Lessee is named in this
Lease or a Lease Schedule the liability of each shall be joint and several.
Lessor may bring and prosecute a separate action against separate, individual
Lessees to enforce any one or more Lessees' liability hereunder, whether or not
any action is brought against any other Lessee or any other person and whether
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or not any Lessee or any other person is joined in such action or actions.
Nothing shall prohibit Lessor from exercising its rights against any separate
Lessee and any other person simultaneously, jointly and/or severally. Each
Lessee shall be bound by each and every ruling, order and judgment obtained by
Lessor against any Lessee in respect of the obligations, whether or not such
Lessee is a party to the action or proceeding in which such ruling, order or
judgment is issued or rendered.
23.19. No Joint Venture, Partnership or Agency Relationship. Neither this
Lease nor any Lease Schedule shall create any joint venture or partnership
between the parties. Nothing contained in this Lease and any Lease Schedule
shall confer upon either party any proprietary interest in, or subject a party
to any liability for or in respect of the business, assets, profits, losses or
obligations of the other. Nothing herein contained shall be read or construed so
as to make the parties a partnership, nor shall anything contained herein be
read or construed in any way to restrict the freedom of either party to conduct
any business or activity whatsoever without any accountability to the other
party. Neither party shall be considered to be an agent or representative of the
other party or have any authority or power to act for or undertake any
obligation on behalf of the other party except as expressly authorized by the
other party in writing. Any such unauthorized representation or action shall be
considered a breach of this Lease and any Lease Schedule.
23.20. Nondiscrimination. Neither party shall discriminate against any
person on the basis of race, color, sex, national origin, disability, age,
religion, handicapping condition (including AIDS or AIDS related conditions), or
any other class protected by United States federal law or regulation.
23.21. Non-Party Beneficiaries. Nothing herein, whether express or implied
shall be construed to give any person other than the parties, and their
successors and permitted assigns, any legal or equitable right, remedy of claim
under or in respect of this Lease and any Lease Schedule; but this Lease and any
Lease Schedule shall be held to be for the sole and exclusive benefit of the
parties, and their successors and assigns.
23.22. Notices. Except as otherwise required by law, all notices required
herein shall be in writing and sent by prepaid certified mail or by courier,
addressed to the party at the address of the party specified herein or such
other address designated in writing. Notices are deemed to have been received
[i] on the fourth business day following posting thereof in the U.S. Mail,
properly addressed and postage prepaid, [ii] when received in any medium if
confirmed or receipted for in the manner customary in the medium employed, or
[iii] if acknowledged in any manner by the party to whom the communication is
directed.
23.23. Privileged Licenses.
23.23.1. Lessee acknowledges that Lessor, its parent company,
subsidiaries and affiliates, are businesses that are or may be subject to and
exist because of privileged licenses issued by governmental authorities. If
requested to do so by Lessor, Lessee, and its agents, employees and
subcontractors, shall obtain any license, qualification, clearance or the like
which shall be reasonably requested or required of any of them by Lessor or any
regulatory authority having jurisdiction over Lessor or any parent company,
subsidiary or affiliate of Lessor. If Lessee, or its agents, employees, or
subcontractors, fails to satisfy such requirement or if Lessor or any parent
company, subsidiary or affiliate of Lessor is directed to cease business with
Lessee or its agents, employees or subcontractors by any such authority, or if
Lessor shall in good faith determine, in Lessor's sole and exclusive judgment,
that Lessee, or any of its agents, employees, subcontractors, or representatives
[i] is or might be engaged in, or is about to be engaged in, any activity or
activities, or [ii] was or is involved in any relationship, either of which
could or does jeopardize Lessor's business or such licenses, or those of a
parent company, subsidiary or affiliate, or if any such license is threatened to
be, or is, denied, curtailed, suspended or revoked, this Lease and all Lease
Schedules may be immediately terminated by Lessor without further liability to
Lessee other than as provided in Section 21.2.
23.23.2. Lessee further acknowledges its understanding that it is
illegal for a denied gaming license applicant or a revoked gaming licensee, or a
business entity under such a person's control, to enter or attempt to enter into
a contract with Lessor, its parent company, subsidiaries or any affiliate,
without the prior approval of the Nevada Gaming Commission or other applicable
gaming authorities. Lessee affirms that it is not such a person or entity and
that it is not under the control of such a person; and agrees that this Lease
and all Lease Schedules are each subject to immediate termination by Lessor,
without further liability to Lessee, other than as provided in Section 21.2, if
Lessee is or becomes such a person or entity or is under the control of such a
person.
23.24. Pronouns. Masculine or feminine pronouns shall be substituted for
the neuter form and vice versa, and the plural shall be substituted for the
singular form and vice versa, in any place or places herein in which the context
requires such substitution or substitutions.
23.25. Regulatory Approvals. Certain transactions contemplated by this
Lease and any Lease Schedule may require the approval of governmental regulatory
authorities. Those transactions are entirely conditional upon and subject to the
prior approval of
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such authority. If the transactions are not so approved, they shall be null and
void ab initio. The parties shall cooperate with one another and move promptly
with due diligence and in good faith to request any required or appropriate
regulatory approvals. If the action or inaction of any governmental regulatory
authority renders the parties unable to consummate any transaction contemplated
by this Lease and any Lease Schedule which thereby denies a party a material
benefit contemplated by this Lease and any Lease Schedule resulting in the
unjust enrichment of the other party, the parties shall negotiate in good faith
an amendment to this Lease and any Lease Schedule which fairly compensates the
party denied the benefit.
23.26. Riders. In the event that any riders are attached hereto and made a
part hereof and if there is a conflict between the terms and provisions of any
rider, including any Lease Schedule and the terms and provisions herein, the
terms and provisions of the rider or Lease Schedule shall control to the extent
of such conflict.
23.27. Setoffs. The monies owed by Lessee herein shall be paid in full when
due under the terms of this Lease and any Lease Schedule without right of setoff
of any monies owed by Lessor to Lessee under any other agreement or for any
other purpose.
23.28. Severability. Each term, covenant, condition or provision of this
Lease and any Lease Schedule shall be viewed as separate and distinct, and in
the event that any such term, covenant, condition or provision shall be held by
a court of competent jurisdiction to be invalid, the remaining provisions shall
continue in full force and effect.
23.29. Subcontracting. Lessee shall not subcontract any of its obligations
herein, or any portion thereof, without Lessor's prior written consent. Consent
by Lessor to any subcontracting of Lessee`s obligations or responsibilities as
set forth in this Lease and any Lease Schedule shall not be deemed to create a
contractual relationship between Lessor and the subcontracting party.
23.30. Suitability. Lessee understands and acknowledges that this Lease and
any Lease Schedule, at Lessor's discretion, may be subject to Lessee and its
principals completing and submitting to Lessor a due diligence compliance
questionnaire (including an Authorization for the Release of Information) and
being found suitable by Lessor's Compliance Committee. Notwithstanding any other
provision in this Lease and any Lease Schedule to the contrary, Lessor may
terminate this Lease and any Lease Schedule without further obligation or
liability to Lessee if, in the judgment of Lessor's Compliance Committee, the
relationship with Lessee or its principals could subject Lessor to disciplinary
action or cause Lessor to lose or become unable to obtain or reinstate any
federal, state and/or foreign registration, license or approval material to
Lessor's business or the business of any Lessor subsidiary.
23.31. Survival of Indemnities. All indemnities of Lessee shall survive and
continue in full force and effect for events occurring prior to the return of
the Equipment to the Lessor, notwithstanding the expiration or termination of
the Term.
23.32. Time Periods. In the event the provisions of this Lease or any Lease
Schedule require any act to be done or to be taken hereunder on a date which is
a Saturday, Sunday or legal holiday, such act or action shall be deemed to have
been validly done or taken on the next succeeding day which is not a Saturday,
Sunday or legal holiday.
23.33. Waiver. The failure of any party to insist, in any one or more
instances, upon performance of any of the provisions of this Lease or any Lease
Schedule or to take advantage of any of its rights hereunder shall not operate
as a waiver thereof or preclude any other or further exercise thereof or the
exercise of any other right or power. Accordingly, the acceptance of rent by
Lessor after it is due shall not be deemed to be a waiver of any breach by
Lessee of its obligations under this Lease or any Lease Schedule.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date set forth above.
ROYAL STAR ENTERTAINMENT, LLC, a PDS GAMING CORPORATION, a
Delaware limited liability company Minnesota corporation
By:s/Xxxxxxx X. Xxxxxx By:s/Xxxxx Xxxxxx
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Print Name:Xxxxxxx X. Xxxxxx, Vice President Print Name:Xxxxx Xxxxxx,President
-------------------------------- ----------------------
Its: Its:
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