EXHIBIT 10.11
DEVELOPMENT RIGHTS AGREEMENT
This Development Rights Agreement (the "Agreement") is made this 10th
day of July 2001 by and among VIVA GAMING & RESORTS INC., a Florida corporation
("Viva US"), VIVA GAMING & RESORT DE MEXICO, S.A. DE C.V., a corporation
organized under the laws of Mexico ("Viva Mexico") (Viva US and Viva Mexico are
collectively referred to as "Developer") and PHOENIX LEISURE, INC., a Nevada
corporation ("PLI") with reference to the following facts:
A. Viva Mexico has obtained an exclusive license to operate
gaming facilities in the Country of Mexico for gaming
activities under that certain an agreement from the National
Lottery for Public Assistance (the "National Lottery").
B. Developer and PLI entered into that certain Transaction Term
Sheet dated April 26, 2001 containing numerous transactions
including Developer's grant to PLI to develop and operate two
(2) gaming facilities in the Country of Mexico (the "Mexican
Sites").
NOW, THEREFORE, the parties hereby agree as follows:
1. Grant of Designated Territory. Developer grants PLI the right, and
PLI assumes the duty, to open and operate the Mexican Sites within the
Designated Territories as defined in Section 2 hereof. The rights granted by
Developer are personal to PLI. As long as PLI is not in default under this
Agreement, Developer will not cause (directly or indirectly) other Gaming
Facilities to be opened in the Designated Territories.
2. Designated Territories.
2.1 Generally. PLI's exclusive right to open the Mexican Sites shall
be limited to the Country of Mexico (the "Site Selection Criteria").
2.2 Selection of Mexican Sites. Within thirty (30) days from the
date of this Agreement, PLI shall deliver a written list of no less than ten
(10) sites (none of which may be within twenty (20) miles of another) that
comply with the Site Selection Criteria (the "Request List"). Upon receipt of
the Request List, Developer shall have thirty (30) to identify five (5)
locations that it would grant PLI the right to commence gaming activities (the
"Response List"). Within thirty (30) days of its receipt of the Response List,
PLI shall select two (2) sites and notify Developer of its final selection of
the Mexican Sites (the "Final Sites"). Once the Mexican Sites have been
identified, any change to the Mexican Sites shall require the approval of the
Developer, which approval shall not be unreasonably withheld.
2.3 Operation of Final Sites. Upon selection of the Final Sites,
Developer agrees that it shall not: (i) develop (directly or indirectly) gaming
facilities within a twenty (20) mile radius of the Final Sites; and (ii) PLI
shall not be required to tender any type of fees to Developer for the right to
operate the Final Sites, except the payments described in Section 2.4 hereof.
2.4 Payments from PLI to Developer for the Final Sites. Once gaming
activities commence at each Final Sites PLI shall be entitled to retain the
first 80% of free cash flow (as defined below) of the operations for each Final
Site until all PLI's capital expenditures with respect to the Final Sites have
been repaid ("Capital Return"). The remaining 20% of free cash flow shall then
be equally distributed between PLI and Viva Mexico. After Capital Return is
achieved, all free cash flow shall be equally distributed between PLI and Viva
Mexico. "Free Cash Flow" shall mean net income after taxes, less any contingency
or other reserves plus description and amortization.
3. Responsibilities of PLI. The provisions of this Paragraph 3 shall
survive the expiration or earlier termination of the "Term" of this Agreement
(as defined in Paragraph 5 below).
3.1. Compensation to Developer. Other than the fees and payments
provided for in Xxxxxxx 0 xxxxxx, XXX shall not be responsible or required to
pay any other type of compensation to Developer for the Final Sites.
3.2 Primary Responsibility for Legal Compliance. PLI acknowledges
that as a matter of law it will retain primary responsibility and liability for
compliance with all applicable federal, state and local laws, rules, regulations
and ordinances applicable to the Final Sites, including those of the Mexican
Lottery.
3.3 Indemnification. PLI agrees to indemnify, defend and save
Developer harmless from any and all losses, costs, liabilities and expenses
(including attorney's fees and costs) incurred or paid in connection with any
claim, demand, judgment, suit or proceeding in which Developer and/or any of its
employees or agents is named or is threatened to be named because Developer is
associated with PLI relating to the Final Sites.
3.4 Licenses and Permits. PLI represents and warrants that it will
obtain and will keep in full force and effect during the term hereof any and all
necessary licenses and permits or other governmental consents required in order
for the Final Sites to operate in the manner contemplated hereby.
4. Responsibilities of Developer. The provisions of this Paragraph 4
shall survive the expiration or earlier termination of the "Term" of this
Agreement as defined in Paragraph 5 below).
4.1 Primary Responsibility for Legal Compliance. Developer
acknowledges that as a matter of law it will retain primary responsibility and
liability for compliance with all applicable federal, state and local laws,
rules, regulations and ordinances relating to its gaming activities in the
Country of Mexico, including those of the Mexican Lottery.
4.2 Indemnification. Developer agrees to indemnify, defend and save
PLI harmless from any and all losses, costs, liabilities and expenses (including
attorney's fees and costs) incurred or paid in connection with any claim,
demand, judgment, suit or proceeding in which PLI and/or any of its employees or
agents is named or is threatened to be named as a result of the obligations
created by this Agreement.
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4.3 Licenses and Permits. Developer represents and warrants that it
will obtain and will keep in full force and effect during the term hereof any
and all necessary licenses and permits or other governmental consents required
in order for PLI to have the right to operate the Final Sites in the manner
contemplated hereby.
5. Term. The term of this Agreement (the "Term") shall commence on the
date first referenced here (the "Commencement Date"). The Term shall expire on
the date twenty (20) years from the Commencement Date. At the expiration of the
Term of this Agreement, if not renewed in writing for an additional fixed period
of 10 years and if not terminated in writing by either party, then it shall be
deemed a month-to-month agreement cancelable by either party on not less than
thirty (30) days written notice, which notice may be given at any time during
the month, provided that in any event the cancellation shall be effective at the
end of the calendar month during which the thirty (30) day notice period runs.
6. Representations and Warranties.
6.1 By PLI. PLI hereby represents and warrants to Developer that:
(i) PLI is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada with full power to execute, deliver, and
perform its obligations under this Agreement; (ii) this Agreement has been duly
authorized by PLI and does not contravene any provision of any law, regulation,
ordinance, or agreement by which PLI is bound; (iii) the person executing this
Agreement on behalf of PLI is authorized to do so; and (iv) PLI shall perform
its duties hereunder in compliance with all applicable federal, state and local
laws, rules, regulations and ordinances applicable to the Mexican Sites,
including those of the Mexican Lottery.
6.2 By Developer.
6.2.1 Viva US hereby represents and warrants to PLI that: (i)
Viva US is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Florida with full power to execute, deliver, and
perform its obligations under this Agreement; (ii) this Agreement has been duly
authorized by Developer and does not contravene any provision of any law,
regulation, ordinance, or agreement by which Developer is bound; (iii) the
person executing this Agreement on behalf of Developer is authorized to do so;
(iv) Developer or its subsidiary, as the case may be, is presently licensed in
the Country of Mexico to conduct the gaming and other activities contemplated by
this Agreement, and shall at all times during the Term maintain such licenses;
and (v) upon the execution and delivery hereof, Developer shall cooperate with
PLI with respect to all filings that PLI elects to make or is required by legal
requirements to make in connection with the contemplated transactions and in
obtaining all consents necessary for the contemplated transactions.
6.2.2 Viva Mexico hereby represents and warrants to PLI that:
(i) Viva Mexico is a corporation duly organized, validly existing, and in good
standing under the laws of the Country of Mexico with full power to execute,
deliver, and perform its obligations under this Agreement; (ii) this Agreement
has been duly authorized by Developer and does not contravene any provision of
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any law, regulation, ordinance, or agreement by which Developer is bound; (iii)
the person executing this Agreement on behalf of Developer is authorized to do
so; (iv) Developer is presently licensed in the Country of Mexico to conduct the
gaming and other activities contemplated by this Agreement, and shall at all
times during the Term maintain such licenses; and (v) upon the execution and
delivery hereof, Developer shall cooperate with PLI with respect to all filings
that PLI elects to make or is required by legal requirements to make in
connection with the contemplated transactions and in obtaining all consents
necessary for the contemplated transactions.
7. Miscellaneous.
7.1 Notices. All notices, demands, requests, consents, approvals or
other communication (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be deemed given and received on the day (or, if such day is not a
business day or such receipt is after 5:00 p.m. on any business day, the next
following business day) (i) when hand delivered to a person of suitable age and
discretion at the address of the receiving party, (ii) when delivered to the
address of the receiving party by overnight mail or delivery service, or (iii)
when successfully transmitted by telecopier transmission, in any of such cases,
delivered addressed or dispatched as follows:
If to Developer: Viva Gaming & Resorts Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier No. (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx &
Wolosky LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
If to PLI: Phoenix Leisure, Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx X. La Femina
Telecopier No. (000) 000-0000
With a copy to: Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx LLP
000 X. Xxxxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier No. (000) 000-0000
or to such other address as such party shall have specified most recently by a
Notice given in the manner required hereunder.
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7.2 Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Nevada without giving
effect to the principles of the conflict of laws thereof. In the event of any
dispute between the parties with respect to this Agreement, exclusive
jurisdiction for such dispute shall be in the courts located in Xxxxx County,
Nevada. The prevailing party in any dispute shall be entitled to recover its
reasonable attorneys fees and costs incurred or paid in connection therewith.
7.3 Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect the construction and
interpretation of this Agreement.
7.4 Severability. The invalidity of all or any part of any section
of this Agreement shall not render invalid the remainder of such section. If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.
7.5 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by either
party without prior written consent of the other. The parties neither intend to
confer any benefit hereunder on any person, firm or corporation other than the
parties hereto, nor shall any such third party have any rights hereunder.
7.6 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument. This Agreement
may contain more than one counterpart of the signature page and may be executed
by the affixing of the signatures of each of the parties to one of these
counterpart signature pages. All of the counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page. This Agreement may be
executed by a facsimile of the signature of the party who is authorized to
execute such document, with the facsimile signature having the same force and
effect as if the document had been executed by the actual signature of the
party.
7.7 Entire Agreement. This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof. The parties are not
bound by any oral statements that are made outside of this Agreement with
respect to the subject matter hereof. This Agreement may not be modified or
altered except by written instrument duly executed by both parties.
7.8 Waiver. No failure or delay of either party in the exercise of
any right given to such party hereunder shall constitute a waiver thereof unless
the time specified herein for exercise of such right has expired, nor shall any
single or partial exercise of any right preclude any other or further exercise
thereof or of any other right. The waiver of any breach hereunder shall not be
deemed to be a waiver of any other or any subsequent breach hereof.
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Executed at Las Vegas, Nevada as of the date first above written.
Viva Gaming & Resorts Inc. Phoenix Leisure, Inc.
a Florida corporation a Nevada corporation
By: By:
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Its: Its:
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Viva Gaming & Resort de Mexico, S.A. de C.V.
a corporation organized under the laws of Mexico
By:
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Its:
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