Exhibit 10.8
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT ("Agreement") is entered into by and between
FortuNet, Inc., a Nevada Corporation ("Lessor"), and K & B Sales, Inc., d/b/a
Goodtime Bingo, an Oklahoma Corporation ("Lessee").
RECITALS
A. Lessee is an authorized, Texas licensed distributor of bingo equipment.
X. Xxxxxx is a Texas licensed manufacturer of bingo equipment and has developed
bingo gaming systems which have been approved by the Texas Lottery Commission.
Definitions:
(a) "System" denotes the equipment and software supplied by FortuNet, Inc. and
more fully described on attached Exhibit "A".
(b) "Equipment" includes, but is not limited to, computers, portable units,
stationary units, transmitters, battery chargers, ticket printers, log printers,
furniture and any other supplies and personal property supplied by FortuNet for
operation of the System.
(c) "Delivery" occurs when the System is delivered to Lessee's place of business
or End User's facility.
(d) "Install", "installed" or "installation" occurs when the End User starts to
derive revenue from the use of the System.
(e) "End User" is the party identified as the User or End User in the Placement
Agreement used by Lessee.
NOW, THEREFORE, in consideration of the recitals and the mutual covenants
contained in this Agreement to be performed by Lessor and Lessee, and for other
valuable consideration, Lessor and Lessee agree as follows:
1. LEASE OF EQUIPMENT.
(a) Lease and Delivery. Lessor agrees to lease to Lessee, and Lessee agrees to
lease from Lessor a System and Equipment (collectively referred to as "System").
If the order submitted by
Lessee for an End User location is accepted by Lessor, meets or exceeds the
minimum criteria established by the parties, Lessor shall ship the System to the
address identified by Lessee.
January 4, 1999 by:
Date of Acceptance ------------------------------------
on behalf of FortuNet
EXISTING INSTALLATIONS - EXHIBIT A
On or Before Date to Ship System
2. AUTHORIZATION TO SUBLEASE.
Lessee is hereby given express and written permission to sublease the
System to an End User.
3. LEASE TERM.
(a) Term of Lease: The Term of this Lease shall commence on the date of
execution. The Agreement shall continue for a period of one year, (the "Term")
unless the Term is extended and the Term shall automatically extend for
additional one year periods unless Lessee provides written notice to Lessor of
Lessee's intention not to extend this Agreement. Such notice must be provided
not less than thirty (30) days before the expiration of the Term or any
extension. Lessor shall have the right to terminate this Lease at the end of the
primary Term or any extension by giving written notice to Lessee of its
intention not to renew this Lease for another term at least thirty days prior to
the expiration of the Term or any extension.
4. INSTALLATION AND TRAINING. Lessor recognizes and accepts the full
responsibility for installing the System and initial training of the End User.
Ongoing training shall be provided by Lessee.
5. LEASE RENTS AND PAYMENTS.
(a) Lessee shall pay Lessor rent for the System as follows: a percentage of the
collected revenues received from the End User for subleasing the System from
Lessee based on the schedule in Exhibit "B" attached hereto. The per unit
average weekly revenue shall be calculated and paid based on each hall's
revenues instead of an aggregate calculation.
(b) Lessee's rental payments shall be made on a weekly basis (Monday through
Sunday) and shall be paid in lawful money of the United States. Lessee shall
deposit rent payments to Lessor by depositing same in the U.S. Postal Service,
with payments due on Wednesday of the following week commencing the Wednesday of
the week after installation of the System.
(c) Delinquent Payments. If Lessee fails to pay to Lessor any portion of any
rental payment or any other sum required to be paid by Lessee to Lessor under
this Lease within fifteen (15) days after
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the date the payment or sum was due, Lessee shall pay interest on such
delinquency to Lessor from the date such payment was due until the date such
payment is made at the rate of ten percent (10%) per annum. Any delinquent
payment shall be paid by Lessee upon demand by Lessor.
6. LESSOR'S OWNERSHIP OF THE SYSTEM.
(a) Title. Lessee acknowledges and agrees that Lessor is the sole owner of the
System, and that by executing this Lease, Lessee shall not possess or obtain any
ownership interest, legal or equitable, in (i) the System or (ii) Lessor's
intellectual property pertaining to the System. Lessee shall execute such
supplemental instruments as Lessor may reasonably deem necessary or advisable
and shall otherwise cooperate to protect and defend the right and title of
Lessor to the System. The System is, and shall at all times be and remain, the
personal property of the Lessor, FortuNet, Inc., of Las Vegas, Nevada,
notwithstanding that the Equipment or any part of it may now be, or hereafter
become, in any manner affixed or attached to real property.
(b) Equipment Labels. Lessee agrees that Lessor may place such labels, plates,
or other markings on the Equipment as Lessor, in Lessor's discretion, deems
appropriate to identify its interest in the Equipment. Lessee agrees to use its
best efforts to not allow or to permit the removal or concealment of any such
labels, plates, or markings.
7. TAXES.
In addition to the weekly rental set forth in this Agreement, Lessee shall
pay all sales and use taxes required to be collected by the State of Texas that
are levied or based upon the leasing of the System, excluding, however, all
taxes on or computed by reference to Lessor's income and personal property taxes
and similar obligations for which Lessor is primarily liable.
8. REPAIRS AND MAINTENANCE.
Lessor shall provide Lessee with technical support by telephone twenty-four (24)
hours per day, seven (7) days per week, during the Term or extension. Upon
receipt in Las Vegas, Nevada, by the Lessor of a shipment of the System or any
part thereof from the Lessee, Lessor will promptly repair or replace at its
discretion the System or parts thereof, and re-ship the repaired or replaced
equipment to Lessee's business address within five (5) working days of Lessor's
receipt of the System or parts thereof. Lessor's obligation under this paragraph
shall also include maintaining the software and backups for the System and
updating the System on a timely basis as new releases of the System become
available and receive approval of the Texas Lottery Commission ("TLC"). Lessee
shall be promptly notified of and provided with all software updates approved by
TLC (both hardware and software) of the System, and hardware updates shall be
provided to replace older versions within a reasonable time period. Lessor may
perform software
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maintenance by remotely accessing the System or by sending software maintenance
kits to Lessee, at Lessor's option. Lessor shall pay all costs, expenses, fees,
and charges incurred in connection with its obligations under this paragraph
during the term of this Lease.
9. WARRANTIES. Lessor represents and warrants that Lessor has good clear and
marketable title to the System and the Equipment, free from any and all liens
and encumbrances, and shall defend the title to the System and Equipment against
any adverse claims. Lessor represents and warrants that no person holds a claim
or interest in the System and Equipment that arise from an act or omission of an
act by Lessor that will interfere with Lessee's use of the Equipment during the
Term. Lessor represents and warrants that the equipment and software complies
with federal and state gaming laws and regulations. Lessor agrees to hold
harmless and indemnify Lessee for any damages, losses, claims, causes of action,
expenses (including attorney's fees) for any injury to person or damage to
property caused by or related to the System, equipment, or parts supplied to
Lessee by Lessor. Lessor will not indemnify Lessee or End User for loss of
profits, reimbursement for prizes, use of coupons, or other promotional items.
10. DEFAULT BY LESSEE.
(a) Events of Default. Lessee shall be in default of this Agreement upon any of
the following:
(1) Failure by Lessee to pay any rental payment or other amount provided in
this Agreement during the period before it becomes delinquent, and such
delinquency continues for ten (10) days after written demand by Lessor for such
performance; or
(2) Failure by Lessee to satisfy any other material provision of this
Agreement required to be satisfied by Lessee, and such failure continues for
thirty (30) days after written demand by Lessor for such performance.
(b) Remedies. If Lessee is in default under this Agreement, Lessor may, at its
option, exercise any one or more of the following remedies:
(1) Allow Lessee to remain in possession of the System and file for binding
arbitration to recover all rents and other payments then due under this
Agreement with respect to any or all items of the Equipment, including all
reasonable attorney's fees and expenses; or
(2) Take possession of any or all items of the System in End User's
possession in accordance with applicable law and after giving End User 30 days
written notice and either: (i) terminate this Agreement, retaining all rental
payments made by Lessee as compensation for the use of the System up to the time
of the termination; or (ii) file for binding arbitration to collect any sums
then owing or thereafter coming due during the remainder of
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the Term, less such sums that Lessor may receive from its efforts to mitigate
any damages.
11. DEFAULT OR TERMINATION BY END USER.
(a) In the event that the End User terminates its Placement Agreement or
defaults in any material respect on the Placement Agreement, Lessor will consent
to Lessee's installation of the System or any portion thereof with another End
User or a new End User at Lessee's option under terms consistent with this
Agreement.
(b) If, however, Lessee is unable to install the System or any portion thereof
with another End User or new End User, then Lessee shall return the System to
Lessor within five business days of Lessee taking possession of the System.
12. ACCOUNTING.
(a) At the time of delivery of Equipment, Lessor shall provide to Lessee serial
numbers for all such equipment delivered.
(b) The financial relationship between Lessee and its End Users, including but
not limited to lease revenue, is confidential and proprietary and is not to be
disclosed to third parties.
(c) Lessor shall have the right to inspect Lessee's records pertaining to monies
due and the End User Placement Agreements for the Equipment leased, upon
reasonable notice to Lessee.
13. SHIPPING COSTS: Lessor and Lessee hereby agree that shipping costs shall be
borne by the entity shipping the equipment.
14. EXCESS SHIPMENT. Lessor shall deliver a reasonable number of pieces of
excess equipment to Lessee, which equipment, subject to the terms and conditions
of this Agreement, which may be used by Lessee to replace installed equipment on
an as needed basis. Lessor will maintain the number of pieces of excess
equipment in an amount not less than ten per cent (10%) of the aggregate total
of all equipment installed at all End User's locations. If any of the excess
equipment is used to produce revenue, Lessee shall report same and pay the
appropriate percentage to Lessor.
15. STORAGE: Lessee agrees and acknowledges that Lessee will not assess a
storage charge against Lessor for any costs associated with or in connection
with storing the system or parts thereof or excess equipment.
16. TERMINATION OF AGREEMENT:
If Lessee elects not to extend the term of this Agreement, Lessee will ship to
Lessor at Lessee's expenses all components of the System in accordance with
terms and conditions of this Agreement. If Lessee terminates this Agreement,
however, the terms shall remain in effect for the units subject to existing
Placement Agreements with Lessee's customers until the end of the term for
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each Placement Agreement. Lessee shall notify Lessor of the termination date for
said Placement Agreements. As to the above-mentioned Placement Agreements,
Lessee will continue to service such contracts and account to Lessor for such
sums as required under this Agreement and the parties' obligation under this
Agreement will continue in force and effect for any such Placement Agreements.
17. MISCELLANEOUS.
(a) Notices. Any notice to be given under this Agreement by Lessor or Lessee
shall be given in writing or delivered in person and transmitted by facsimile,
or by first class mail, certified and return receipt requested, postage prepaid,
at the address indicated below, unless the party giving any such notice has been
notified, in writing, of a change of such address:
To Lessor: FortuNet, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
(000) 000-0000
(000) 000-0000 (facsimile)
To Lessee: K&B Sales, Inc., d/b/a Goodtime Bingo
00000 Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
000-000-0000
000-000-0000 (facsimile)
Any such notice shall be deemed effective upon: (i) delivery to a responsible
person at the party's address, if delivered in person; (ii) upon the completion
of transmission, if sent by facsimile; or (iii) seventy-two (72) hours after
posting, if mailed, unless a legal holiday comes within said period, and in that
event notice shall be effective 120 hours after posting or upon actual receipt
whichever is sooner. All notices shall also be transmitted by facsimile.
(b) Binding Agreement. This Agreement shall be binding upon and inure to the
benefit of any successor of Lessor or Lessee, and any successor shall be deemed
as substituted for Lessor or Lessee, respectively, under the terms of this
Agreement. As used in this Agreement, the term "successor" shall include any
person, firm, corporation, or other business entity which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially all of the
assets of the business of Lessor or Lessee or continues substantially the same
business operated by Lessor or Lessee, respectively.
(c) Modification of Agreement. No amendment to or modification of this Agreement
shall be valid unless in writing and duly executed by Lessor and Lessee.
(d) Prior Agreements Superseded. This Agreement supersedes any and all other
agreements, either oral of written, between the
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parties hereto and contains all of the covenants and agreements between the
parties.
(e) Headings. The captions or headings in this Agreement are for convenience
only and in no way define, limit or describe the scope or intent of any
provision or section in this Agreement.
(f) Arbitration. In the event a dispute arises under this Agreement the parties
hereby agree to binding arbitration to be submitted to the American Arbitration
Association in Dallas, Texas.
(g) Controlling Law. This Agreement is controlled by the law of the State of
Texas. Venue of any action hereunder shall be in Dallas County, Texas.
IN WITNESS OF THIS AGREEMENT THE UNDERSIGNED hereby acknowledge that, they have
read, understood the terms and conditions and received a copy of this Agreement.
DATED this 4th day of January, 1999.
LESSOR, FortuNet, Inc., a Nevada corporation
By: /s/ XXXX XXXXX
---------------------------------
Its President
LESSEE, K&B Sales, Inc., d/b/a Goodtime Bingo
By: /s/ XXXXX XXXXXXXX
---------------------------------
Its Vice President
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