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EXHIBIT 10.18
AGREEMENT
This Agreement is made as of April 4, 1996, by and between POWER BINGO
CORPORATION, 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000 ("PBC"),
and STUART ENTERTAINMENT, INC., 0000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx
00000 ("Stuart"), with reference to the following fact:
RECITALS
A. PBC is engaged in the manufacture and leasing of a portable
desk-top display, bingo game device, a central computer system and related
software control programs suitable for playing bingo, hereinafter referred to
as the "Device."
X. Xxxxxx desires to be the marketer, and in some case, the
manufacturer, of the Devices.
C. PBC desires to gain the benefits of Stuart's marketing
capability and its network of distributors to exploit the leasing of the
Devices, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereby agree as follows:
1. RECITALS. The recitals set forth above are hereby incorporated in
this Agreement by reference as though fully set forth herein.
2. TERM. The term of this Agreement shall commence on the date of
execution of this Agreement and shall continue until terminated by either party
upon a minimum of nine (9) months' advance written notice to the other, except
as otherwise provided herein.
3. TERRITORIES. During the term of this Agreement, PBC hereby
appoints Stuart as its sole marketer of the Devices in the States and Provinces
listed on Exhibit A ("Marketing Area") and PBC appoints Stuart to be its
exclusive manufacturer of Devices for the States and Provinces listed on
Exhibit B ("Manufacturing Area") where PBC does not have the required gaming
lincenses; Stuart accepts such appointments. PBC shall be free to sell, rent
or lease Devices in the States and Provinces listed on Exhibit C ("Other Area")
without obligation or liability to Stuart. During the term of this Agreement,
Stuart shall not manufacture, market, distribute, sell, rent or lease devices
that complete with the Devices in any areas. The parties acknowledge that PBC
has certain existing customers listed on Exhibit D ("Excluded Accounts") for
which the payments required pursuant to Paragraph 5 do not apply. However, in
the event that (a) Stuart, or its distributor is influential in preserving an
Excluded Account which would have otherwise
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terminated its rental or lease of the Devices, or (b) Stuart, or its
distributor is influential in increasing the number of Devices leased or rented
by an Excluded Account, the parties agree to negotiate a payment or commission
to Stuart in recognition of such influence and/or efforts in such amount as
they shall mutually agree. PBC acknowledges that Stuart is currently marketing
a device in the Province of Ontario that may compete with the Device, and that
such arrangement shall not be deemed to be a breach of this Agreement. PBC
acknowledges that Stuart manufactures and markets such products as the System
12(TM) electronic bingo system, and devices designed to be used as verifiers
for bingo game operators, and that products similar to such products will not
be considered competing with the Device for the purpose of this paragraph.
4. DUTIES OF DEVICES. During the term of this Agreement, Stuart
shall use its best efforts to promote the Device through personal contracts,
promotional literature such as flyers and articles in newsletters, and at trade
shows where Stuart is an exhibitor as deemed appropriate by the parties.
5. COMPENSATION. During the term of this Agreement, PBC shall pay
Stuart one-half of all gross revenues generated from the Devices rented or
leased in the Marketing Area. In the Manufacturing Area (defined in Paragraph
3) where the parties deem it necessary that Stuart manufacture the Devices, PBC
grants to Stuart the exclusive license to manufacture and lease the Devices in
such territories during the term of this Agreement. PBC shall take all
reasonable steps to assist Stuart in manufacturing Devices equivalent to the
Devices manufactured by PBC. After Stuart has recovered twice the direct cost
to manufacture each Device, Stuart shall pay to PBC one-half of all gross
revenues received by Stuart from the lease or rental of each of such Devices.
All payments from one party to the other shall be made no later than the
fifteenth (15th) day of the following month in which revenue was received from
the lease or rental of the Devices.
6. REPRESENTATIONS AND WARRANTIES OF PBC. PBC represents and
warrants to Stuart as follows:
(a) That it is duly incorporated in the State of Nevada
and has the power to enter into this Agreement.
(b) That, except as set forth in Paragraph 16(b), it is
the sole owner or exclusive licensee of all necessary software,
patents, copyrights, technology and other intellectual property
(collectively, "Intellectual Property") necessary to manufacture the
Devices.
(c) That is has not licensed a third party otherwise
consented to use of the Intellectual Property by a third party in the
Marketing Area or the Manufacturing Area except for certain agreements
or understandings with PBC distributors which entitle PBC to collect
at least fifty percent (50%) of the gross revenue from such
territories.
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(d) That, except as set forth in Paragraph 16(b), the
Devices and the Intellectual Property do not infringe on any patent,
trademark, copyright or trade secret rights in any third party.
(e) That is believes itself and its principals to be
fully capable of qualifying for gaming licenses in various
jurisdictions in the event PBC were to make application for such
licenses, except Xxxxxx Xxxx.
(f) That it believes that its principals have not been
convicted of any felonies, or any other crimes of moral turpitude,
except Xxxxxx Xxxx.
(g) That it is not prohibited from entering into this
Agreement by any contract or other corporate obligation and that it is
not required to obtain any consent from any third party to enter into
or perform its obligations hereunder.
(h) No other party has the right to manufacture, market,
distribute, lease or rent the Device, except as set forth in
subparagraph (c) above and the Other Area listed on Exhibit C.
(i) That is will make reasonable efforts to remove Xxxxxx
Xxxx as a director and shareholder of PBC no later than December 31,
1996.
7. REPRESENTATIONS AND WARRANTIES OF STUART. Stuart represents and
warrants to PBC as follows:
(a) That is duly incorporated in the State of Delaware
and that it has full power to enter into this Agreement.
(b) That is has and has obtained and maintains all gaming
licenses and consents necessary to conduct its business as it is now
conducted.
(c) That it is not prohibited from entering into this
Agreement by any contract or other corporate obligation and that it is
not required to obtain any consent from any third party to enter into
this contract or perform its obligations hereunder.
8. INDEMNIFICATIONS
(a) PBC agrees to protect, save, indemnify and hold
Stuart harmless from and against any and all liabilities, damages,
costs, expenses (including reasonable attorneys fees and costs),
demands, actions, causes of action and any other liability whatsoever
arising out of or in any way related to (i) any breach of warranty or
representation of PBC, and (ii) any claims of actual or alleged
infringement of any patent, trademark, copyright or trade secret
related to the Device or the Intellectual Property brought by a third
party. The indemnity in (ii) above shall be limited in all events to
the sum of
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$500,000.00 which may be covered by insurance obtained by PBC for such
purpose. The parties may from time to time discuss the increase in the
limits of any insurance policy held by PBC with each party sharing the
cost of the increase.
(b) Stuart agrees to protect, save, indemnify and hold
PBC harmless from and against any and all liabilities, damages, costs,
expenses (including reasonable attorneys fees and costs), demands,
actions, causes of action and any other liability whatsoever arising
out of or in any way related to any breach of warranty or
representation of PBC,
9. MINIMUM RATES. The parties agree to distribute and lease the
Devices at minimum rates mutually agreed by the parties based upon market
conditions and demand for the Device.
10. TRAINING. PBC shall provide reasonable assistance in the
training of personnel for a reasonable period of time to facilitate leasing of
the Device in the Marketing Area and the Manufacturing Area.
11. PERMUTATIONS. Stuart hereby grants to PBC a nonexclusive license
to use the permutations owned by Stuart for Devices in the Marketing Area.
Such license shall survive termination of this Agreement, but only at those
specific locations utilizing the permutations at the time of termination.
12. TERMINATION.
(a) This Agreement shall terminate thirty (30) days after
either party gives written notice to the other party that the other
party is in material breach of its obligations under this Agreement,
with reasonable detail of the facts and circumstances claimed as a
basis for the breach, unless the other party cures such breach within
thirty (30) days after receipt of such written notice.
(b) Xxxxxx xxx terminate this Agreement on a minimum of
thirty (3) days advance written notice in the event that Xxxxxx Xxxx
remains as an officer, director, shareholder or contractor of PBC and
Stuart has a bona fide good faith belief, supported by objective
evidence from a governmental agency (but not necessarily written) that
one or more of its gaming licenses may be adversely affected by its
relationship with PBC. In the event Stuart shall terminate the
Agreement under this subparagraph (b), Stuart shall not be obligated
to make payments to PBC pursuant to Paragraph 14(b), thereafter.
13. RESULT OF TERMINATION. Upon termination of this Agreement for
any reason, Stuart shall immediately return to PBC at Stuart's cost all Devices
received from PBC other than Devices manufactured by Stuart which shall be
retained by Stuart. In the event of termination of this Agreement for any
reason, PBC shall thereupon, at its option, be subrogated immediately to any
agreements, rights and relations of Stuart's with dealers, salesmen or other
representatives appointed by Stuart for leasing PBC's Devices and all such
agreements shall contain a clause allowing assignment of such agreement to PBC
upon termination of this Agreement.
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14. PAYMENTS AFTER TERMINATION.
(a) In the event PBC terminates this Agreement without
cause pursuant to Paragraph 2, or Stuart terminates this Agreement
because to a material breach by PBC which is not timely cured pursuant
to Paragraph 12, PBC shall pay to Stuart for each of twenty-four (24)
months following the date of termination an amount equal to one
hundred fifty percent (150%) of the "average monthly payment" (as
defined in subparagraph (c)) made by PBC to Stuart under the terms of
this Agreement. Such payments shall represent the sole and exclusive
remedy to Stuart for a breach by PBC. In the event PBC terminates
this Agreement due to a material breach by Stuart which is not timely
cured pursuant to Paragraph 12, PBC shall not be obligated to Stuart
for any payments after termination.
(b) In the event Stuart terminates this Agreement without
cause pursuant to Paragraph 2, or PBC terminates this Agreement
because of a material breach by Stuart which is not timely cured
pursuant to Paragraph 12, provided Stuart has the continued license to
operate the Devices in the Manufacturing Area, Stuart shall pay to PBC
for each of twenty-four (24) months following the date of termination
an amount equal to one hundred fifty percent (150%) of the "average
monthly payment" (as defined in subparagraph (c)) made to PBC to
Stuart under the terms of this Agreement. Such payments shall
represent the sole and exclusive remedy to PBC for a breach by Stuart.
In the event Stuart terminates this Agreement due to a material breach
by PBC which is not timely cured pursuant to Paragraph 12, Stuart
shall not be obligated to Stuart for any payments after termination.
(c) For all purposes of this Paragraph, the "average
monthly payment" shall be calculated by averaging the fifteen (15)
most recent monthly payments made immediately prior to the notice of
termination (or in the event termination occurs less than fifteen (15)
months from commencement, then the measure shall be the average of the
payments during the term).
15. AUDIT RIGHTS. Either party shall have the right to audit the
books and records of the other party necessary to calculate and confirm the
revenues received by each party in the lease or rental of the Devices in the
Marketing Area or the Manufacturing Area. Such audit shall be conducted at the
respective party's sites where such records are located and shall be conducted
during normal business hours on reasonable advance notice.
16. TRADEMARK. During the term of this Agreement, the parties agree
to market the Devices under the name "Power Bingo King." Upon termination of
this Agreement, all rights to the name "Power Bingo" shall remain solely with
PBC and all rights to the name "Bingo King" shall remain solely with Stuart.
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17. MISCELLANEOUS.
(a) Final and Entire Agreement; Integration. This
Agreement contains the final, entire and exclusive agreements between
the parties and supersedes any and all prior agreements, negotiations
and communications, oral or written. Each party has made such
investigation of the facts pertaining to this Agreement and all
matters pertaining hereto as it has determined necessary. No
representation, promise, inducement or statement of intention has been
made by any party or any manner or type whatsoever which is not set
forth herein.
(b) Disclosure. Stuart is aware of an action entitled
Bingo Cardminder Corporation vs. Power Bingo Ltd., filed in the U.S.
District Court for the No. District of California, Civil Action No.
C-94-334-FMS, in which the trial court found that the device used by
defendant therein infringed against the plaintiff's patent. This case
is currently on appeal. Stuart is aware of an action entitled Bingo
Cardminder Corporation vs. Power Bingo Corporation, xx.xx., filed in
the U.S. District Court for the No. District of California, Civil
Action No. C-96-20141-RMW, on February 26, 1996. Such acknowledgement
by Stuart and disclosure by PBC shall not be deemed as any kind of
waiver by Stuart not shall diminish in any way Stuart's right to
indemnity pursuant to Paragraph 6(a) hereof.
(c) Writing. Unless otherwise provided herein, no
supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties.
(d) Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
(e) Severability. If any clause, provision, covenant or
condition of this Agreement is unenforceable, illegal or invalid, the
remaining provisions shall nevertheless be carried into effect.
(f) Authority. Each party executing this Agreement
represents and warrants that he has the authority to bind his
principal to this Agreement. All of the covenants, releases and
agreements herein contain in favor of the persons or entities released
are made for the express benefit or each and all of such persons or
entities, each of whom has the right to enforce such provisions, and
their successors and assigns.
(g) Notice. All notices, demands or requests ("Notice")
made pursuant to, under or by virtue of this Agreement must be in
writing and delivered personally or mailed postage prepaid by
registered or certified mail, return receipt requested, or sent by
Federal Express, addressed as set forth above. Any Notice to PBC
shall also be sent
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to 0000 Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, with a copy to
Fainsbert Mase & Xxxxxx, LLP, 11835 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxx. Any
party may designate a different address by Notice similarly given.
Any Notice so given, delivered or made by United States mail shall be
deemed to have been given or delivered or made on the third business
day following the day on with the same is deposited in the United
States mail as registered or certified mail, return receipt requested,
addressed as above provided, with postage thereon fully prepaid. Any
such Notice not given, delivered or made by registered or certified
mail as aforesaid, shall be deemed to be given, delivered or made on
receipt of the same by the party to whom the same is to be given,
delivered or made.
(h) No Agency. This Agreement does not constitute Stuart
the agent or legal representative of PBC for any purpose whatsoever.
Stuart is not granted any right or authority to assume or to create
any obligation or responsibility, express or implied, in behalf of, or
in the name of PBC, or to bind PBC in any manner.
(i) Applicable Law. This Agreement shall be interpreted,
applied and enforced under and pursuant to the laws of the State of
Iowa.
(j) Arbitration. The exclusive method for resolving any
controversy, claim or dispute between the parties arising out of or in
any way related to this Agreement, other than one seeking injunction
relief, shall be settled and determined by binding arbitration in Los
Angeles, California, in accordance with the rules of the American
Arbitration Association, and judgment on the arbitration award may be
entered in any court having jurisdiction thereof. The arbitration
shall be heard by a panel of three arbitrators; each party shall
select one arbitrator, and the two selected arbitrators shall select
the third arbitrator. The rules which pertain to depositions and
discovery in arbitration proceedings is hereby incorporated into and
made as part of this Agreement.
(k) Attorney's Fees. If any action in law or equity,
including an action for declaratory relief or arbitration proceeding,
is brought to enforce or interpret provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys'
fees and costs, which may be determined in the same action or any
separate action brought for that purpose in addition to any other
relief to which the party may be entitled.
(l) Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective shareholders, partners, directors, officers, heirs,
successors, representatives and assigns. This Agreement may not be
assigned without the express written consent of the other party, which
shall not be unreasonably withheld. This Agreement and the licenses
contained herein are intended by the parties to survive in the event
PBC sells substantially all of its assets or transfers all or a
portion of its business related to the Device and the Intellectual
Property.
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(m) Language. The language in all parts of this
Agreement shall be in all cases construed as a whole according to its
fair meaning and not strictly for or against any party hereto.
(n) Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
(o) Number, Gender and Tense. All words used in this
Agreement shall be construed to include the plural as well as the
singular number, the present tense shall include the past and future
tense, and the masculine gender shall include the feminine and neuter
gender.
(p) Mutual Cooperation. The parties hereto agree to
cooperate each with the other to effectuate this Agreement and to
execute any and all additional documents or to take such additional
action as may be necessary or appropriate to that end.
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IN WITNESS WHEREOF, the parties hereby have executed this Agreement
effective as of the day and year first written above.
Dated: April 4, 1996 POWER BINGO CORPORATION, a Nevada
corporation
By /s/Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, President
Dated: April 4, 1996 STUART ENTERTAINMENT, INC., a
Delaware corporation
By /s/Xxx Xxxxxx
-------------------------------------
Xxx Xxxxxx, President
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In consideration of the agreement executed on this date ("Agreement"),
Power Bingo Corp., for the benefit of Stuart Entertainment, Inc. ("Stuart") and
in consideration of the obligations undertaken by Stuart in such agreement
hereby agrees to establish the following trust:
1. The trust shall have assets contributed as follows:
(a) PBC shall contribute 20% of the revenues generated in
favor of PBC under the Agreement, until the trust has of $250,000.
PBC will not be required to contribute any more to the trust.
2. Stuart shall be the beneficiary of the trust, but only to the
extent that it is required under a certain patient indemnity contained in
paragraph 8(a) of the Agreement. It is the intent that Stuart shall receive a
maximum patent indemnity from PBC of $500,000 that is to be paid either from or
through insurance proceeds or through the trust created herein. Nothing in
this Agreement shall be construed to increase the indemnity obligations of PBC
contained in the Agreement.
3. The trust may be terminated upon (a) the dismissal, with
prejudice of the suit titled Bingo CardMinder Corp. vs. PBC et al filed in U.S.
District Court for the Northern District of California, or (b) the satisfaction
of the patent indemnity obligations of PBC in favor of Stuart under the
Agreement. Upon termination, the assets of the trust shall be returned to PBC.
4. The parties acknowledge that the trust is to be created by
appropriate documentation so that such trust and its purpose shall not be
affected in any way by any bankruptcy proceedings concerning PBC.
IN WITNESS WHEREOF, the parties have executed this agreement on the
4th day of April 1996.
POWER BINGO CORP. STUART ENTERTAINMENT, INC.
By /s/Xxxxx Xxxxxxxx By /s/Xxx Xxxxxx
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EXHIBIT A
All areas in North America not specifically referenced on either
Exhibit B or Exhibit C.
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EXHIBIT B
The State of Washington, the province of Ontario, and such other
jurisdictions as the parties may agree to from time to time.
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XXXXXXX X
Xxxxxxx, Xxx Xxxxxx, Xxxxxx and California (except for the counties of
San Bernardino, Riverside, Orange, San Diego and Imperial).
Provided, however, that in the event that PBC shall obtain new
installations of the Device occurring after the date of this Agreement in New
Mexico, Stuart shall receive 25% of the gross revenues receive by PBC.
Provided, however, that in the event that PBC shall obtain new
installations of the Device occurring after the date of this Agreement in
Arizona, Stuart shall receive 20% of the gross revenues received by PBC.
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EXHIBIT D
SCHEDULE OF EXISTING CUSTOMERS
1. Lac Courte Oreilles--Wisconsin
2. Stockbridge--Wisconsin
3. Evergreen Seniors--Brunswick, Maine
4. VIP Hall--Portland, Maine
5. Fairfield--Maine
6. Creek Nation (Multiple)--Oklahoma and Atmore Alabama
7. Choctan Nation (Multiple)--Oklahoma
8. Lucky Star--Oklahoma
9. Seminole Tribe--Oklahoma
10. Delaware Tribe--Oklahoma
11. Cherokee Nation--Oklahoma
12. Military--
(a) Hunter, Georgia
(b) Fort Xxxxxxx, Georgia
(c) Fort Hood, Texas
(d) Xxx Houston, Texas
(e) Xxxxxxxx, Texas
(f) Jacksonville, Florida
(g) Fort Xxxxxxx, Kansas
13. Soboba Tribe--Hemet, California
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00. Sycuan Tribe--San Diego, California
15. Xxxxxxxx--Montana
16. Fort Xxxxxxx--South Dakota
17. 789--Riverton, Wyoming
18. Rosebud--South Dakota
19. Rock Springs--Wyoming
20. Xxxxxxx--South Dakota
21. Rapid City--Wyoming
22. Two (2) pending--Wyoming
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