EXHIBIT 6.5
AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 14 of July, 1994
by and between Executive Video Systems, Inc. a Maryland Corporation with offices
at 0000 Xxxx Xxx Xxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 ("EVS"), Xxxxx Xxxxxxxxx and
Xxx Xxxxxxxx (the "EVS Stockholders") and Advanced Gaming Technology, Inc., a
Wyoming Corporation with offices at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx X000,
Xxxxxxxxxx, Xxxxxxx 00000 and 0000-000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxx ("AGT").
WHEREAS, AGT is in the business of supplying bingo halls ("AGT Halls") with
electronic bingo devices, fixed video systems and stand alone handsets
("Handsets"); and
WHEREAS, EVS presently has contracts with five bingo halls ("Existing
Locations") with its proprietary fixed video systems installed as noted on
Schedule A affixed hereto; and
WHEREAS, EVS also has been marketing new hall locations ("Eminent Halls")
as noted on Schedule B hereto, a majority of which it anticipates will become
Existing Locations; and
WHEREAS, AGT wishes to market the EVS System (as hereafter defined) to the
exclusion of the fixed video systems it presently is using which EVS has agreed
to in accordance with the terms of this Agreement. In addition, AGT desires to
exclusively market the EVS System in the North American continent.
Now, therefore, in consideration of the mutual promise of the parties
hereto and other good and valuable consideration the parties agree as follows:
1. Granting of License
Subject to the payment of all fees due hereunder, EVS hereby grants to AGT
and AGT hereby accepts an exclusive and nontransferable (except with EVS'
written consent) license to use the EVS System (including all executable files,
exclusive of source codes, for bingo, speed bingo, poker, Keno, including
modifications and upgrades) during the term hereof and to grant sublicenses (the
"License"). Any sublicenses granted hereunder shall be on terms and conditions
consistent with this Agreement.
2. Term
Unless otherwise terminated or canceled as provided herein, this License
shall be for a term of three years ("Term") with an Option to renew for five (5)
additional three year
periods. The Option to renew will automatically apply unless the Agreement is
terminated pursuant to paragraph 15 hereof. However, the Option to renew shall
not be applicable if EVS receives a bona fide third party offer to purchase the
assets of EVS or 100% of the outstanding stock of EVS. If EVS does receive a
third party offer, AGT shall have fifteen days, from the date of written notice,
to agree to match the terms of said offer.
3. Best Efforts
AGT hereby covenants to use best efforts to promote and market the EVS
System to new customers and to existing customers ("New Halls").
4. Distribution
The parties hereto agree that EVS is entitled to revenues generated from
the sublicensing of the EVS system, worldwide, as follows:
A. Fifty percent (50%) of the gross monies received by AGT from
Eminent Halls;
B. Thirty-five percent (35%) of the gross monies received by AGT from
New Halls in North America; and
C. Five percent (5%) of the gross monies received by AGT from New
Halls other than those described in A or B of this paragraph four.
5. Marketing
EVS will notify AGT of any leads resulting from previous marketing efforts
of EVS exclusive of Eminent Halls. AGT hereby covenants to pursue these leads in
a timely and efficient manner.)
6. Training
EVS will thoroughly and completely train any employees, officers, directors
or agents of AGT in the use, maintenance, manufacture and installation of the
EVS System. All expenses of the training will be paid by AGT. EVS will provide
AGT with complete owner/operator manuals and a guide for any trouble shooting
which needs to be done on the EVS System.
7. Leads
Within sixty (60) days of receiving the lead, AGT will supply all necessary
monies which may be needed for the equipment required for EVS to perform the
terms and conditions of this Agreement so as to meet any reasonable deadline
established by an Eminent
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Hall or a New Hall. If this Paragraph 7 is not met on a timely basis, EVS may
proceed directly with the lead and, as to that lead, no monies will be due AGT
under this Agreement. However, the terms of this Agreement will remain in full
force and affect for any other potential leads. AGT will bear the cost of any
replacement hardware necessary to maintain the EVS system in a good and working
manner.
8. Equipment Purchase
AGT shall be entitled to purchase any equipment independent of EVS provided
it meets specifications necessary for the EVS System to operate efficiently. AGT
shall also be entitled to pay any vendors on a direct basis with all receipts
and purchase documents being the property of AGT.
9. Storing of Equipment
Any equipment purchased by AGT may be stored at a location at AGT's choice,
including existing space utilized at Cactus Bingo Supply ("Cactus"), 0000 Xxxx
Xxxxxx Xxxx, Xxxxx 00, Xxxxxxx, Xxxxxxx 00000, provided however, such space is
readily and conveniently located for accessibility by EVS employees. Storage
space at Cactus is limited to no more than forty-eight (48) total terminals and
all related components and cabinets and will be provided at no cost to AGT.
10. Marketing
A. AGT covenants to be responsible for all marketing and sales
activity for the EVS System and all costs associated with such activity.
B. EVS covenants to be responsible for all manufacturing,
installation, and maintenance activity for the EVS System and all costs
associated with such activity, exclusive of international duties, tariffs,
taxes and international shipping charges prorated based on distance from
international border to destination.
11. Inventory
AGT agrees to purchase the following inventory from EVS for the sum of
$10,527.00. All costs associated with delivery and training shall be the
responsibility of AGT and reimbursable to EVS I within 14 days from the date of
departure of EVS employees from Vancouver.
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A. One (1) complete demonstration system with all peripheral
equipment, executable files and four (4) player terminals;
B. AGT shall deposit $10, 527.00 into an escrow account with EVS's
attorneys, Houlon & Xxxxxx, to be released to EVS upon completion of
delivery, assembly and presentation of original invoices to AGT.
11. 1. AGT agrees to further purchase the following inventory at cost, from
EVS upon verification of inventory, but no later than 30 days from date of
execution of this Agreement, in US Funds, totaling $50,500.00.
A. Forty (40) player terminals and all related components, plus 4
additional light pens.
B. Ten (10) custom cabinets.
C. (1) 486 Server and Touch screen with 2 VGA NTSC Video Cards.
D. Ethernet repeater
12. Stock Option
A. At any time during the Term of this Agreement, AGT shall have the
right to purchase, from the EVS Stockholders, outstanding stock of EVS (the
"Option"). At least ninety (90) days prior to the date upon which the
Option is to be exercised, AGT shall deliver to the EVS Stockholders
written notice of its intent which shall specify the date and time for the
transfer of the shares. The purchase price ("Purchase Price") shall be
determined as follows:
i. If AGT shall exercise this Option during the initial twelve
(12) month period of this Agreement, the Purchase Price shall equal to
$1,000,000.00 or $1,000.00 per share and shall be paid as described
below in either (a) or (b):
(a)(i) Five Hundred Thousand Dollars ($500,000.00) in cash
or cash equivalent on the date the Option is exercised; and
(ii) A promissory note in the principal amount of Five
Hundred Thousand ($500,000.00) at eight percent (8%) interest
payable in twelve (12) equal monthly installments of $43,494.23.
The note will be secured by stock of AGT. Said stock shall be
nonrestricted and publicly traded.
(iii) For a period of one (1) year from the date the Option
is exercised, EVS will consult, advise, assist, and train the
employees of AGT in the operation of the EVS System.
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The EVS Shareholders will receive 500.00 per day plus expenses
for each full business day their resources are needed.
ii. If AGT shall exercise the Option after the initial twelve
(12) month period of this Agreement, but prior to the end of the 24th
month of this Agreement, the Purchase Price shall equal $1,500,000.00
and shall be paid as follows:
(a) Seven Hundred Fifty Thousand Dollars ($750,000.00) in
cash or cash equivalent on the date this Option is exercised; and
(b) A promissory note in the principal amount, of Three
Hundred Seventy Five Thousand Dollars ($375,000.00) at eight
percent (8%) interest payable in twenty four (24) equal monthly
installments of $16,960.22; and
(c) Stock in AGT with a current market value of $375,000.00.
Said stock must be registered, unrestricted and freely tradable
in either the New York, American or NASDAQ Exchange. The value of
the stock is to be determined based on a 20 day average of the
trading price (for the 20 days prior to the date of the exercise
of the Option) less a discount of fifteen percent (15%).
iii. If AGT shall exercise the Option after the initial (24)
month period of this Agreement, but prior to the end of the 36th month
of this Agreement, the Purchase Price shall equal $2,000,000.00 and
shall be paid as follows:
(a) One Million Dollars ($1,000,000.00) in cash or cash
equivalent on the date this Option is exercised; and
(b) A promissory note in the principal amount of, Five
Hundred Thousand Dollars ($500,000.00) at eight percent (8%)
interest payable in twenty four (24) equal monthly installments
of $22,613.63; and
(c) Stock in AGT with a current market value of $500,000.00.
Said stock must be registered, unrestricted and freely tradable
in either the New York, American or NASDAQ Exchange. The value of
the stock is to be determined based on a 20 day average of the
trading price (for the 20 days prior to the date of the exercise
of the Option) less a discount of fifteen percent (15%).
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B. If AGT shall desire to exercise the Option, upon notifying EVS of
said intention, AGT shall deposit Twenty-Five Thousand Dollars ($25,000.00)
into an escrow account with EVS' attorneys, Houlon & Xxxxxx (the
"Deposit"). The Deposit shall be applied towards the cash or cash
equivalent required at the time of exercise of the Option.
C. The Option discussed herein may also be exercised by AGT by
purchasing all of the assets of EVS. The terms of the sale of the assets
shall be the same as described herein in paragraph 12.
13. Royalties
If, pursuant to the Option, AGT does acquire the outstanding stock of EVS,
as additional compensation under this Agreement, EVS or its assigns shall
receive continuing royalties equal to three percent (3%) of gross revenues
received by AGT from the EVS System. All monies due under this paragraph
thirteen shall be paid within fifteen days of the end of each month and shall be
accompanied by the necessary financial statements. The obligation of this
paragraph thirteen shall continue for a period of ninety nine (99) years. If,
after the acquisition of EVS stock by AGT or their assigns, the stock or assets
of AGT are sold, any sale of said stock or assets shall contain a requirement
that the obligation of this paragraph 13 shall continue.
14. Monies from Eminent Halls
In the event AGT does not exercise the Option nor does it renew this
Agreement beyond the initial Term, AGT shall pay an amount equal to twenty-five
(25%) percent of the gross revenues received from all Eminent Halls for a period
of three years from the final effective date of this Agreement. The requirement
of this paragraph 14 shall be due regardless of any system being used by AGT at
the Eminent Halls.
15. Termination or Cancellation
A. EVS may terminate or cancel this Agreement anytime and the License
granted herein if:
1. AGT fails to materially pay any and all monies due EVS
hereunder;
2. AGT is in default of any provision hereof and such default has
not been cured within thirty (30) days after EVS gives AGT written
notice;
3. AGT becomes insolvent or seeks voluntary or involuntary
protection under any bankruptcy law.
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In the event of a termination or cancellation, EVS may:
(i) declare all amounts owed hereunder to be immediately due
and payable;
(ii) require AGT to cease any further use or marketing of
the EVS System provided that such restriction does not affect
AGT's ability to operate the EVS Systems that have already been
installed;
(iii) cease performance of all of EVS' obligations hereunder
without any liability to AGT.
B. EVS may terminate or cancel this Agreement, at the end of any three
(3) year term if AGT has not successfully placed 250 player terminals
during the previous three (3) year term.
C. AGT may terminate or cancel this Agreement if:
1. EVS becomes insolvent or seeks voluntarily or involuntarily
protection under any bankruptcy law;
2. EVS is unable to market the EVS System to a third party
infringement action.
3. If AGT terminates this Agreement pursuant to paragraph 15, the
terms of paragraph 14 herein shall survive.
16. Damages
In no event shall EVS be liable or responsible to AGT or their sublicensees
for any indirect, special or consequential damages, lawsuits or lost profits
arising out of or related to this Agreement.
17. Taxes
AGT shall pay all taxes on or in any way measured by this Agreement
including, but not limited to personal property taxes, if any.
18. Warranties and Representations of EVS
EVS warrants and represents, the following:
18.1 Corporate Organization. EVS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland, is duly
qualified to do business in said State, and has full power and authority to
carry on its current business.
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18.2 Corporate Authority. The execution and delivery of this Agreement to
AGT and the carrying out of the provisions hereof have been duly authorized by
the Board of Directors of EVS and authorized by EVS' shareholders.
18.3 Noninfringement. The EVS System in whole or in part, does not infringe
any patents, copyrights, trade secrets, trademarks or other proprietary rights
of any third parties.
18.4 Proprietary Rights. The EVS System is full force and has no liens,
claims, proceedings or causes of action which in any way affect the validity or
enforceability of such EVS System.'
18.5 Litigation. There is no suit or action, or legal, administrative,
arbitration or other proceeding or governmental investigation affecting EVS, or
to the best knowledge and belief of EVS, threatened against EVS which materially
or adversely affects the business of EVS.
18.6 Effect of Agreement. The terms and conditions of this Agreement and
all other instruments and agreements to be delivered by EVS to AGT pursuant to
the terms and conditions of this Agreement are valid, binding and enforceable
against EVS in accordance with their terms, subject only to the applicable
bankruptcy, moratorium and other laws generally affecting the rights and
remedies of creditors.
19. Warranties and Representations of AGT
AGT warrants and represents, the following:
19.1 Corporate Organization. AGT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wyoming, is duly
qualified to do business in said State, and has full power and authority to
carry on its current business.
19.2 Corporate Authority. The execution and delivery of this Agreement to
EVS and the carrying out of the provisions hereof have been duly authorized by
the Board of Directors of AGT and authorized by AGT's shareholders.
19.3 Binding Nature. This Agreement shall be, when duly executed and
delivered, a legal and binding obligation of AGT, enforceable in accordance with
its terms.
19.4 Representations and Warranties. No representation or warranty by AGT
in this Agreement contains or will contain any untrue statement or omissions, or
will omit to state a material fact necessary to make the statements contained
herein not misleading. All
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representations and warranties made by AGT in this Agreement shall be true and
correct as of Closing with the same force and effect as if they had been made on
and as of such date.
19.5 Litigation. There are no pending, or to the best knowledge and belief
of AGT, threatened actions or proceedings before any court or administrative
agency or other authority which might or will materially or adversely affect
AGT's ability or right to perform all of AGT's obligations hereunder.
20. EVS Indemnification
EVS covenants and agrees to defend, indemnify and hold AGT harmless against
loss, damage, claim of third parties' actions, suits, demands, judgment or
expenses (including legal and other fees), costs and charges incurred or
sustained by AGT as a result of or attributable, in whole or in part, to any
misrepresentation or breach of any representation, warranty, covenant or
agreement herein, given or made by EVS.
21. AGT Indemnification
AGT covenants and agrees to defend, indemnify and hold EVS harmless against
loss, damage, claim of third parties' actions, suits, demands, judgment or
expenses (including legal and other fees), costs and charges incurred or
sustained by EVS as a result of or attributable, in whole or in part, to any
misrepresentation or breach of any representation, warranty, covenant or
agreement herein, given or made by AGT.
22. Arbitration
In the event a dispute is unable to be settled directly between the parties
herein, after thirty days notice of one party to the other, either party may
refer the matter to arbitration and thereafter, the parties agree that the
matter will be settled by binding arbitration in accordance with the arbitration
rules of the American Arbitration Association.
23. No Competition
No parties shall have any interest, direct or indirect in any competitive
company or system. This paragraph 23 shall include all officers, directors and
key employees of AGT. However, notwithstanding the terms of this paragraph 23
any relationships which may exist on the day this Agreement is executed, shall
not be subject to the terms of this Paragraph 23. Notwithstanding the,terms of
Paragraph 23, EVS has a right to operate Existing Halls independently and with
no financial or other obligations to AGT. Those Existing Halls are those
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halls listed on Schedule A hereto. A situation will not be deemed as competitive
if EVS does not possess the capability to develop modifications to the work as a
whole or does not substantially cooperate to develop such modifications.
24. Payment
All monies due EVS under paragraph 4 of this Agreement, shall be due and
payable within fourteen days of receipt of said funds by AGT. The parties hereto
agree that if AGT fails to meet the conditions of this paragraph 24, an
independent third party shall be appointed to review AGT's financial situation
and to distribute the money in accordance with the terms of this Agreement. This
cost of administering this distribution and review will be shared by the parties
in the same percentage as gross revenues are shared.
25. System Modifications
EVS shall provide to AGT, any corrections, revisions or modifications to
the EVS System at no cost to AGT so long as such revisions or modifications do
not alter the work as a whole. AGT may require versions to be developed that
does alter the EVS System as a whole and EVS covenants to use best efforts to
develop such versions with the new resources (including financial) to be
provided by AGT.
26. Hardware
The Parties understand that all hardware is owned by AGT and the executable
files contained on the hard disk of the server are the property of AGT during
the term of this Agreement. EVS may not interfere with the operation of any EVS
System at any location as long as this Agreement is in effect.
27. Notice
Any notice that is to be delivered under this Agreement shall be delivered
first class mail and addressed as follows:
28. Governing Law
The parties hereto agree to this Agreement shall be governed by the laws of
the state of Maryland.
29. No Partnership
The parties hereto agree that nothing contained herein shall serve as to
create a partnership between the parties.
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30. Counterpart
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
31. Prior Agreement
This Agreement supersedes all prior agreements between the parties with
regards to the subject matter hereof.
32. Binding Nature
This Agreement shall be binding upon and enure to the benefits of the
parties hereto and their respective heirs and assigns.
33. Time of Essence
For purposes of this Agreement, time shall be of the essence.
IN WITNESS WHEREOF, The parties have executed this Agreement the date and
your first above written.
WITNESS: EXECUTIVE VIDEO SYSTEMS, INC.
--------------------------------- BY: ---------------------------------
ADVANCED GAMING TECHNOLOGY, INC.
--------------------------------- BY: ---------------------------------
WITNESS:
--------------------------------- ---------------------------------
Xxxxx Xxxxxxxxx
--------------------------------- ---------------------------------
Xxx Xxxxxxxx
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PROMISSORY NOTE
$200,000.00 February 12, 1996
For value received, ADVANCED GAMING TECHNOLOGY, INC. (the "Maker") promises
to pay to the joint order of XXXXXXXX XXXXXXXXX and XXX XXXXXXXX or their
assigns (the "Noteholder") TWO HUNDRED THOUSAND DOLLARS and 00/100 ($200,000.00)
together with interest, from the date hereof at the rate of Eight percent (8%)
per annum on the unpaid portion of this Note, payable in Eighteen (18) equal
monthly installments of ELEVEN THOUSAND EIGHT HUNDRED TWENTY EIGHT DOLLARS and
06/100 ($11,828.06) beginning on March 12, 1996 and continuing on the 12th day
of each month until paid. All monies due under this Note will be due and payable
on or before August 12, 1997 (the "Maturity Date").
And it is expressly agreed that if default be made in the payment of any
one of the aforesaid installments is uncured for five (5) days after written
notice thereof all payments including unpaid principal and interest shall be
accelerated and shall become due and payable immediately, time being of the
essence of all installments due under this obligation.
In addition, upon the happening of any one of the following events, this
Note shall become at once due and payable without notice, presentment or demand
of payment:
1. The insolvency of, or the execution of an assignment to the benefit
of creditors or of the appointment of a receiver of the, property of the
Maker.
2. The filing of the petition of bankruptcy by or against the Maker or
the commencement of any proceeding in bankruptcy or any acts relating to
the relief of debtors or to the relief or adjustment of any indebtedness of
the Maker, either through reorganization, composition, extension or
otherwise or for the attachment of credit or property of the Maker.
Upon a default in the payment of any amounts due under this Note, and such
default continues for two (2) consecutive months, the Noteholder may apply as a
setoff against any amount due under the Note, any monies being held or collected
by Noteholder on behalf of the Maker pursuant to Paragraph 8(b)(i) of the
Agreement of Sale dated February 9, 1995.
No delay or failure on the part of the Holder to exercise any power or
right shall be deemed continuous, nor shall a partial exercise preclude full
exercise thereof; and no right or remedy of the Holder shall be deemed abridged
or modified by any course of conduct, and no waiver
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thereof shall be predicated thereon, nor shall failure to exercise any such
power or right subject the Holder to any liability.
The right is reserved to prepay at any time without penalty or premium all
or any part of the principal hereof.
The Makers jointly and severally hereby authorize and empower any Court of
Record or any attorney at law to enter judgment by confession upon the
occurrence of any default, hereunder by Makers against Maker in favor of the
Holder hereof, for the principal balance and all accrued interest due hereunder
plus costs, including reasonable attorney's fees, expressly waiving summons or
other process, and do further consent to the immediate execution of said
judgment, expressly waiving benefit of all exemption laws.
ADVANCED GAMING TECHNOLOGY, INC.
--------------------------------- BY: ---------------------------------
Xxxxx Xxxxxxx, President
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