Exhibit 10.25
AGREEMENT
Agreement made this 5th day of April 2000, by and between NAMCO CYBERTAINMENT
INC., 000 Xxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000, a Delaware corporation
("Namco"), and HOLOWORLD located at 0000 Xxxx Xxxxxxx Xxxxx #0, Xxxxxxxx, XX
00000, a Delaware corporation ("Location") FEIN # 00-0000000.
RECITALS
1. Namco is in the business of supplying coin, token and xxxx operated
amusement devices ("Equipment") in business facilities and for use in
entertaining customers. For purposes of this Agreement, Equipment shall
be deemed to include coin, token, or xxxx-operated machines such as
video games, merchandising games (games which dispense prizes or
tickets for prizes directly to consumer), pinball machines, air hockey,
simulation machines and any other coin or token operated amusement
devices of whatever nature, except for coin operated food and beverage
equipment, and cigarette machines.
2. Location is in the business of operating a family entertainment center
known as HOLOWORLD located at 0000 Xxxx Xxxxxxx Xxxxx #0, Xxxxxxxx, XX
00000 ("Premises") which, among other things, contains an area of
approximately 4,500 square feet designated for arcade use.
3. Location wishes to maintain a portion of the space within the Premises
for use of the Equipment ("Arcade"). The Equipment shall be located in
the Arcade and such other areas or places within the Premises as may be
agreed upon from time to time by the parties.
4. NAMCO agrees to install its Equipment in the Arcade and elsewhere
within the Premises subject to the terms and conditions of this
Agreement.
NOW THEREFORE, for and in consideration of the mutual covenants and agreements
hereinafter set forth, the sufficiency of which is hereby acknowledged, Namco
and Location hereby agree as follows:
1. Incorporation of Recitals. The above recitals are by this reference
incorporated herein as if set forth with particularity.
2. License. Location does hereby grant to Namco the full and exclusive
right to operate Equipment at the Premises according to the provisions
specifically described in this Agreement. Namco anticipates operating
approximately 75 games at the Premises.
3. Term. This Agreement shall commence on the date Namco commence its game
operations (proposed May 10, 2000) at the Premises ("Commencement
Date") and shall end the last day of the month following the third
(3rd) anniversary of the commencement date ("Termination Date").
Thereafter, this Agreement will automatically renew for additional
twelve (12) month periods upon the same terms and conditions as stated
herein, unless either party delivers written notice of termination to
the other party at least thirty (30) days prior to the expiration of
the initial term and subsequent additional terms.
4. Fees. In consideration of the use of the designated space in the
Premises, Location shall retain the balance of the annual net revenues
generated from the Equipment after paying the following amounts to
Namco as set forth below:
Combined Video Redemption Crane
Annual Net Revenue Games Games Equipment
Zero to $500,000 56% 36% 65%
$500,000 to $750,000 42% 28% 61%
Over $750,000 27% 23% 58%
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The Annual Net Revenue shall be computed on a rolling twelve months
(commencing with onset of this Agreement).
The term Net Revenues as used herein is defined as gross less sales
taxes, gross receipt taxes, or any other fees associated with the
operation of the Equipment at the Premises. Gross receipt taxes for
Equipment will be paid by Namco.
5. Collection. For purposes of this Agreement, "operating week" shall mean
seven (7) days beginning on Friday ending on Thursday. "Collection
date" shall mean the close of business each revenue week Holoworld
shall deposit revenues derived from Equipment for each operating week
and provide Namco with a weekly collection report within one (1) day of
the collection date as provided in this paragraph below. The amount due
Namco shall be paid to and received within one (1) day of each
collection date. In the event of monetary defaults, only two (2)
notices are required to be given in any twelve month period, upon the
third such default in any twelve month period, the Agreement may be
immediately terminated.
Location shall use a debit card system for the operation of the
Equipment in place of the traditional coin or token operated "cash
boxes." At the end of each operating week, Location shall provide Namco
with a hard copy of game data, specifically game revenues and number of
plays (to include free play and xxxxx cards) played on each piece of
Equipment. Namco will be provided with unencumbered access, both
directly and via modem, to the network and game management computer
system during normal business hours for informational purposes only.
Such policies are designed to ensure that Namco has complete access to
accurate game revenues and number of plays on each piece of Equipment.
Report layout and other policies related to the debit card system will
be addressed in a side letter. Report and game management information
will include all location revenue sources. The complete report of all
sources of revenue is needed to correctly assess the portion of total
revenue dollars represented by Namco Equipment.
6. Ownership. Location acknowledges that all of the Equipment is and shall
always remain the sole and separate property of Namco. Location shall
in no way pledge the Equipment or any part thereof or in any manner
interfere with Namco's ownership of the Equipment. At Namco's option,
concurrently with the execution of this Agreement and from time to time
thereafter as requested by Namco, Location shall execute such
documents, including UCC-1 forms, which Namco may require to confirm
its ownership of the games. Location hereby appoints Namco as
Location's attorney-in-fact to execute and file all documents, which
Namco requires in the exercise of its reasonable business judgment to
confirm its ownership of its games, including any renewal UCC-1 forms.
7. Amusement Solutions System. Location owns an "Amusement Solutions"
debit card system installed at site and will be responsible for payment
of that system to Amusement Solutions and for any major repairs. A
major repair is defined as a repair or replacement part which costs
$25.00 or more. Namco will be responsible for any minor repairs to the
system components attached to Namco-owned Equipment. In addition
Location will be responsible for all supplies for the system and
purchasing additional game readers as required. Location will purchase
the debit cards and be responsible for additional card purchases during
the term of this Agreement.
A weekly audit will be completed to ascertain both parties' revenue
percentages.
Location agrees to indemnify and hold Namco harmless from and against
any claims, damages, causes of actions, liability and expenses incurred
by Namco arising from any use of the Amusement Solutions System by
Namco or any assertion of infringement of any patent, copyright,
trademarks or similar proprietary right.
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8. Exclusive Use. Location covenants, warrants, and agrees that during the
term of this Agreement it will not operate or cause to be operated at
the Premises any Equipment, as defined herein, other than Equipment
installed and maintained by Namco and the motion simulator and virtual
reality games owned and operated by Location.
Location certifies that it has no other contractual agreement with any
person or entity regarding Equipment at the Premises and hereby agrees
to indemnify and hold Namco harmless if Namco should be called upon to
defend or enforce its rights in a civil action with respect to such
pre-existing contractual relationship. Location warrants and represents
that Namco has the exclusive right to install and operate Equipment in
the Premises. In the event Location violates this provision, then in
addition to any remedies available to Namco at law or in equity, Namco
will be entitled to 100% of the Gross Revenues generated from the
Equipment from the date of such violation until the same is cured by
Location.
9. Access and Operation. Namco shall install the Equipment on the Premises
and shall thereafter have the full right during Location's regular
business hours to service, maintain, exchange or replace any and all
Equipment. Location shall at all times during its regular business
hours keep the Equipment accessible and ready for customer use in the
designated area of the Premises or in an area mutually agreed upon by
both parties. Location shall furnish at its sole cost and expense all
electrical current for the Equipment.
Namco, in consultation with Location, will determine model, make, type
or quality of the Equipment initially installed at the Premises. Namco
may with the approval of Location substitute another machine for any
machine installed at the Premises.
10. Maintenance And Supply. Namco shall service and maintain all of the
Equipment installed on the Premises at no cost to Location, unless
necessitated by the negligent act(s) or omission(s) of Location, its
employees, agents or contractors, in which event Location shall be
solely responsible for the cost of repair and/or replacement of the
Equipment.
Location at its sole cost and expense shall provide and pay for (i)
debit card system; (ii) all prizes associated with the operation of
redemption equipment; (iii) redemption tickets; (iv) staffing of
Redemption center and floor management; (v) all utilities consumed in
the Premises; (vi) maintenance for the Premises; and (vii) security for
the Premises.
Namco at it sole cost and expenses shall provide (i) one (1) full time,
on site technician to facilitate maintenance and repair of Equipment;
(ii) all needed parts to perform maintenance and repair of Equipment;
(iii) merchandise associated with the operation of Crane equipment.
Namco agrees to provide at least 25% annual game rotation with mutual
agreement on selection of games.
Namco will create a web page for HoloWorld and provide attachment to
its website.
11. Permits. Namco shall apply for and obtain any and all permits and
licenses required for the operation of the Equipment by the applicable
City, State, or County ordinances. Namco and Location will equally
share the cost of such permits and licenses. If the number or type of
pieces of Equipment placed at the Premises requires a separate business
license, arcade license, or other Premises specific license or permit,
the fees for such shall be paid for by Location.
In the event that any law now existing or which may hereafter be passed
shall require the payment of any increased or additional license fees,
taxes or other charges on account of the use or operation of the
Equipment, then if Namco and Location cannot agree upon a reasonable
division of such increased or additional license fees, taxes, or other
charges to be paid between themselves, either party may cancel this
Agreement with 30 days prior written notice.
12. Termination. This Agreement may be terminated by either Party in the
event of any breach by the other of any term, covenant, or condition to
be performed by it pursuant hereto, if such default shall continue for
a ten day period after giving of written notice of the event of such
default in accordance with the provisions hereof.
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Namco or Location may terminate this agreement on at least sixty (60)
days written notice if during the initial 120 day (one hundred twenty)
day period the average gross sales do not reach $175.00 (One Hundred
Seventy Five Dollars) per week per machine.
It is further understood that Namco or Location shall have the option
of terminating this Agreement at anytime after the first anniversary of
this Agreement should the trailing gross sales for any consecutive 12
month period be less than $175.00 (One Hundred Seventy Five Dollars)
per week per machine. Notice of such termination shall be in writing
and delivered to Location no less than sixty (60) days prior to the
termination date.
Namco and/or Location may also terminate this Agreement if any of the
following events occur:
(i) Location moves to other Premises;
(ii) Location terminates or closes its business; and
(iii) Location sells, leases, transfers, or otherwise disposes
of its business (including the sale of the majority of shares
of a corporation, a long-term management agreement, or any
other legal device which alters the person(s) capable of
making decisions in a closely held corporation).
13. Notices. All notices required to be given hereunder by either of the
parties to the other shall be in writing and shall be sent by certified
or registered mail, return receipt requested, or by overnight courier
or mail with customary evidence of receipt, addressed to the addresses
set forth above. Notice shall be effective on the date of mailing
thereof.
14. Governing Law. This Agreement shall be construed and enforced in
accordance with the law of the State of Colorado. If any portion of
this Agreement is found to be in violation of any law that portion
shall be considered severed from the Agreement and it shall not affect
the remainder of this Agreement.
15. Amendments. This writing constitutes the entire Agreement between the
parties and merges all prior agreements, understandings and discussions
herein. This Agreement may not be changed or modified except by written
agreement executed by Namco and Location. Unless so specified in
writing by Namco, no representation, promise or warranty made by any
person either before or after the signing hereof shall be binding upon
Namco.
16. Insurance. Namco at Namco`s own cost and expense, shall obtain and
maintain, in full force and effect during this Agreement Worker's
Compensation Insurance and commercial general liability insurance
providing coverage for its Equipment and operations liabilities. The
limits of the general liability insurance shall be not less than
$1,000,000 for personal and bodily injury per occurrence, and
$1,000,000 for property damage.
Location, at Location's cost and expense, shall provide Worker's
Compensation Insurance, all-risk casualty and commercial general
liability insurance for its operations at Premises. The limits shall be
not less than $1,000,000 for personal and bodily injury per occurrence,
and at least $1,000,000 for property damage. Each party shall upon
request of the other party provide a certificate for such insurance by
the insuring carrier or carriers. The fulfillment of these various
obligations shall not relieve Location or Namco of any liabilities
assumed in this Agreement.
17. Right of First Refusal. Based on Namco's performance, HoloWorld
(parent company of Location) agrees to grant Namco the right of first
refusal to operate Equipment in its next two new site openings after
Location on exactly the same terms and conditions and format as this
Agreement ("Right of First Refusal Agreement"). Any breach of the Right
of First Refusal Agreement is considered a breach of this Agreement and
will give Namco rights of termination for this Agreement.
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18. Prompt Execution. The terms and conditions stated herein are
conditional upon the prompt execution of this Agreement. Should the
Agreement remain unsigned by either party after April 17, 2000, the
Agreement shall be rendered null and void and be of no force or effect.
19. Binding Effect. This Agreement shall be binding upon the parties
hereto, their permitted heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date and year first
written above.
Namco: Location:
Namco Cybertainment Inc. HoloWorld
By: /s/ By: /s/
Title: Executive Vice President Title: Xxxxxx Xxxxxx, President
Dated: 4/10/00 Dated: 4/12/00
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