LEASE AND CONCESSION AGREEMENT
This Agreement made as of the 17th day of September, 1997 by and between
All-American Golf LLC ("LLC") and Saint Xxxxxxx Golf Corporation ("Developer")
both with offices at 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxxx 00, Xxx Xxxxx, XX
00000 (jointly referred to as "Owners") and Sierra Sportservice, Inc.
("Contractor") and Sportservice Corporation ("Guarantor") with offices at 000
Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, Developer is the developer of a sports entertainment complex
located at the southeast corner of Las Vegas Boulevard South and Sunset Road,
Las Vegas, NV to include: (1) a Callaway Golf Center to be operated by
All-American Golf LLC, a California limited liability company whose members
are Developer (80%) and Callaway Golf Company (20%); and (2) an All-American
SportPark to be operated by Developer;
WHEREAS, the Owners have leased the sites for the foregoing operations
from Urban Land of Nevada under two separate lease agreements, one covering
the Callaway Golf Center (40+/- acres) and one covering the All-American
SportPark and copies of such leases have been provided to Contractor;
WHEREAS, Contractor is engaged in the food and beverage business and is
experienced in concession services; and
WHEREAS, the parties desire to enter into this agreement whereby
Contractor shall be responsible for providing all food and beverage services
at the above-described facility during the term of this agreement.
NOW, THEREFORE, in consideration of the premises hereto and the mutual
covenants hereinafter set forth, the parties agree as follows:
ARTICLE I
Definitions
1.1 DEFINITIONS. As used herein the terms set forth below shall be
defined as follows:
"Affiliate" shall mean any Person that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with the specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling"
"controlled by" or "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct
or cover the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Lease and Concession Agreement.
"Arena Restaurant Sales" means Gross Receipts from the sale of
Refreshments in the Sports Bar and Arena Restaurant located in the pavilion of
the All-American SportPark and any outside Cabana Areas where table service is
provided excepting only ClubHouse and adjacent patio and all Catering Sales.
"Branded Products" shall mean: those products with respect to which
Contractor must pay a franchise or licensing fee and/or advertising fees;
and/or those products which are to be sold using vendor supplied equipment.
"Catering Sales" means Gross Receipts of Contractor generated through
Catering Services.
"Catering Services" shall mean the preparation and sale of Refreshments,
including table and banquet type meal service, for conventions, assemblies and
meetings held at any location in the Park, including the Arena Restaurant,
Clubhouse, and any other location in the Park and all Outside Catering
Services.
"Clubhouse Sales" shall mean Gross Receipts derived from the Sale of
Refreshments in the Golf Club House and adjacent outdoor patio areas,
excluding Catering Sales.
"Common Areas" - means all loading docks and facilities, elevators,
common passage areas, restrooms, and other common areas of the Park, and
appurtenant easement and access areas thereto to the extent necessary for
Contractor's use of the Food Service Facilities for the purposes set forth
herein.
"Concession Sales" means Gross Receipts of Contractor generated through
Concession Services. Any advertising revenues received from purveyors for
signage or sponsorships shall be treated as Concession Sales. However, no
rent shall be payable on any in-kind services offered by purveyors, such as
free equipment or menu boards.
"Concession Services" shall mean the sale of Refreshments from concession
stands, bars, and booths and outside areas (if table service is not provided)
and through the use of roving vendors, excluding Catering Services.
"Contractor" shall mean Sportservice Corporation, or its assignee.
"Contractor's Services" shall mean Catering Services, Concession Services
and the Sale of Refreshments from Mobile Stands, in the Clubhouse and in the
Arena Restaurant hereunder and the conduct of all related business hereunder.
"Default Rate" shall mean a rate per annum equal to the lesser of (i) a
varying rate per annum that is equal to two percent (2%) per annum over the
Prime Rate set by Chemical Bank from time to time with adjustments in that
varying rate to be made on the same date as any change in that Prime Rate and
(ii) the maximum non-usurious rate permitted by Applicable Law, with
adjustments in that varying rate to be made on the same date as any change in
that rate.
"Developer" shall mean Saint Xxxxxxx Golf Corporation.
"Development Costs" shall include all costs of design and construction of
Food Service Facilities and/or of purchasing, shipping and installing
applicable Food Service Assets, including but not limited to all applicable
labor and material charges; construction insurance and bonding; general
contractor fees and charges; architectural, engineering and design fees and
charges; intercompany charges of Contractor's affiliate of 4% of the aggregate
Development Cost of any project and all other out-of-pocket costs and expenses
related to the applicable construction project.
"Drawings" shall mean plans and specifications for the All-American Park
prepared by Xxxxxxx & Hall dated ________________.
"Event" means any concert, entertainment presentation, meeting,
convention or other use of the Park.
"Fiscal Year" shall mean the fiscal year of Contractor which ends on the
Sunday closest to December 31st. The first Fiscal Year shall commence on the
Commencement Date and shall terminate on the next succeeding Sunday closest to
December 31st.
"Food Service Assets" shall mean all Refreshment equipment, furniture,
fixtures and trade fixtures; all related office and commissary equipment and
furniture including but not limited to all concession and commissary items;
all bar, beverage and refrigeration and freezer units; all menu boards, signs
and graphics; all point of sale equipment; appliances and Smallwares; and all
Mobile Stands, transportation equipment; and all patio furniture, fixtures and
equipment.
"Food Service Design Rights" shall mean all intellectual, industrial and
other proprietary rights in and to the design, structure, layout, image, or
name and/or menu of any of the Food Service Facilities, including the right to
copy, reproduce, or otherwise exploit the same and any and all copyrights and
trademarks related thereto.
"Food Service Facilities" shall mean: the Arena Restaurant, the Clubhouse
restaurant associated with the golf club house, all permanent concession
stands associated with the Arena food court; and all other concession stands,
bars, booths, service bars, pantries, restaurants, kitchens, commissaries,
concession storage areas and dressing rooms, concession offices, now or
hereafter erected on the grounds of the Park.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" shall mean any and all applicable courts,
boards, agencies, commissions, offices or authorities of any nature whatsoever
for any governmental or quasi-governmental unit (federal, state, county,
district or municipal), whether now or hereafter in existence.
"Gross Receipts" shall mean the total amounts received by Contractor for
Contractor's Services rendered at the Park hereunder whether such sales be
evidenced by cash, check, credit, charge account or otherwise and shall
include the amounts received from the sale of all such items at the Park,
together with the amount received from all orders taken or received at the
Park, whether such orders be filled from there or elsewhere, less only:
(1) Any Sales Taxes collected in connection with such sale,
as payable to the appropriate Governmental Authority;
(2) Service charge and/or gratuities received by the
Contractor;
(3) Any reduced price sales made to Owner or third parties
at the request of Owner;
(4) Meals consumed by Contractor's on-duty personnel
without charge (or at a reduced price) to such personnel;
(5) Any sublet sales made in accordance with Section 5.13
hereof, (However, commissions from sublet vendors, except those operating
vending machines, shall be included in Gross Receipts);
(6) Receipts from purveyors related to returns;
(7) Manufacturers' and/or Distributors' rebates and awards;
(8) The amount of cash and quantity discounts received from
sellers, suppliers and manufacturers; and
(9) Receipts from the rental of furniture, equipment,
linens, china, cutlery and/or decorations and/or from the sale of flowers.
(10) Receipts from Vending Machines and/or rental fees
received from third party subcontractors operating such machines in the Park.
In no event shall there be deducted from Gross Receipts any taxes imposed
upon the operations or existence of Contractor (such as, without limitation,
income taxes (whether federal, state or municipal and franchise taxes), nor
shall there be deducted any bank charges or service charges for credit or
credit card sales.
"Hazardous Substance" shall mean substances that are defined or listed
in, or otherwise classified pursuant to, any Applicable Law (or other
enforceable criteria and guidelines promulgated pursuant thereto) as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," "pollutants," "contaminants," "radioactive material," "petroleum
or any fraction thereof" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive toxicity
or "EP toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude
oil, natural gas or geothermal energy.
"Indemnities" shall mean Developer, LLC (and its Members), Landlord and
any mortgagee having a security interest in the Park, together with all of
their officers, directors, shareholders, employees and agents.
"Landlord" shall mean Urban Land of Nevada and its successors in title to
the land underlying the Park.
"Legal Requirements" shall mean any and all present and future laws,
statutes, ordinances, decisions, decrees, statutes, rulings, rules, codes,
procedures, orders, regulations, permits, certificates, licenses and other
requirements of any Governmental Authority including, without limitation, any
safety laws, health laws, environmental laws and laws regarding the rights of
and obligations to the handicapped and disabled, including without limitation,
the Occupational Safety And Health Act and the Americans With Disabilities
Act.
"LLC" shall mean All-American Golf LLC whose Members are Developer (80%)
and Callaway Golf Company (20%).
"Mobile Stands" shall mean all portable concession stands and bars, golf
carts, carts and kiosks used by Contractor hereunder.
"Month" shall mean any calendar month unless otherwise specifically
stated.
"Occupancy Taxes" shall mean a tax on rental payments or an ad valorem
tax imposed, assessed or levied by the City of Las Vegas or the County of
Xxxxx (or any taxing jurisdiction that is a subdivision of the foregoing) on
or with respect to Contractor's rights and interests created by this
Agreement, including, but not limited to, Contractor's rights of occupancy and
use of the Food Service Facilities and Food Service Assets provided, however,
the foregoing notwithstanding, in the event that Contractor receives any
written notice of any such Occupancy Taxes, immediate notice thereof shall
promptly be provided to Owner. Owner shall have the right (but not the
obligation) to initiate (or cause to be initiated) a contest of any such
Occupancy Taxes, in which event Contractor shall cooperate in its opposing or
contesting of such levy or assessment. In the event of any such contest,
Owner and Contractor shall each bear their own costs and expenses in
connection therewith.
"Outside Catering" shall mean the provision of Catering Services by
Contractor (or any Affiliate of Contractor) to the Outside Catering Area using
the Food Service Facilities at the Park for preparation of the Refreshments
for which Contractor has obtained the prior written approval of Owner, which
approval will not be unreasonably withheld. Contractor acknowledges that it
will direct its primary focus towards soliciting catering business for its
facilities within the Park and not for providing catering at other locations.
Prior to the acceptance by Contractor of any opportunity to provide Outside
Catering, Contractor shall furnish written notice of each such Outside
Catering opportunity and reasonable details thereof, including copies of any
proposed function sheet(s) and contract(s) for such opportunity to Developer.
Developer shall approve or disapprove of such engagement of Contractor for
Outside Catering within 10 days following receipt of applicable information.
In no event shall Owners assume any risk or liability for the operation by
Contractor of Outside Catering or any costs, liabilities, claims, demands,
losses or damages (of whatever kind) incurred (directly or indirectly) in
connection therewith. Contractor fully assumes any and all such risks and
shall indemnify and hold Owners fully harmless therefrom.
"Outside Catering Area" shall mean anywhere in Las Vegas, Nevada outside
of the Park.
"Owners" shall mean Developer and LLC.
"Park" shall mean the entire 65 acre site described on Exhibit A on which
the Callaway Golf Center and the All-American SportPark are to be built,
together with any expansion hereafter constructed.
"Park Design Rights" shall mean all intellectual, industrial and other
proprietary rights in and to (1) the design, structure or image of the Park or
any entertainment facility therein and (2) to Events held at the Park,
including the right to copy, reproduce or otherwise exploit the same, and the
copyrights and trademarks related thereto. Park Design Rights do not include
the Food Service Design Rights.
"Person" shall mean any individual, corporation, partnership,
association, trust or other entity whatsoever.
"Refreshments" shall mean refreshments, confectioneries, candy, beverages
(alcoholic and non-alcoholic), snacks, meals and all other food and beverage
products of every kind and nature.
"Rent " means the rents and fees due from Contractor to either Developer
or LLC (as applicable) for the exclusive use of the Food Service Facilities
and the grant of rights hereunder, all as provided in Section 5.1 hereof.
"Sales Taxes" means any tax on sales, excise taxes or value-added taxes,
assessed against gross revenues of Contractor hereunder.
"Smallwares" shall mean the following: cutlery utensils, cookware, china,
glassware and uniforms.
"Substantial Completion Date" means the date that construction of all of
the Food Service Facilities in the Callaway Golf Center and the All-American
SportPark, respectively, are substantially complete and all necessary
occupancy and use permits have been issued and substantially all Food Service
Assets have been installed and the entire Park is completed and opened to
patrons for general and customary use.
"Term" shall have the meaning set forth in Section 3.2.
"Utility Systems" means any water, sewage (including but not limited to
all permits, fees and tap fees), gas, plumbing and general lighting, sprinkler
and fire safety, telephone and telecommunication and security facilities,
piping (including drains and grease traps for sewage), ductwork, conduit,
fiber optic lines, wiring (including all electrical panel boards and
transformers), outlets and connections and mechanicals (as applicable); and
heating, ventilating, and air conditioning equipment, ductwork and electrical
components and all applicable elevators and escalators. "Utility Services"
shall mean the full and unimpeded use of the foregoing Utility Systems for
their intended purpose. As used herein, water shall mean water fit for human
consumption and in compliance with all applicable laws, rules, regulations and
orders.
"Vending Machine Receipts" means net receipts from the Sale of
Refreshments from vending machines or rental fees received from third party
subcontractors for permitting such subcontractors to operate Vending Machines
in the Park.
ARTICLE II
Development
2.1 DEVELOPMENT OF PARK.
(a) LLC covenants to develop and construct a portion of the Park on
the site described in Exhibit A on or before October 1, 1997, which will have
the following major attractions:
The Callaway Golf Center (40+/- acres) to include a Country Club
golf experience, as an authorized licensee of Callaway Golf Company to
contain: 110 (on 2 tiers) tee stations; a 14 acre driving range, an executive
par 3 golf course; and a clubhouse (including pro shop, training and custom
club fitting center and Clubhouse Restaurant).
(b)(i) Developer covenants to develop and construct a portion of the
Park on the site described in Exhibit A on or before March 1, 1998 which will
have the following major attractions:
An All-American SportPark with the following amenities:
Slugger Stadium, as an authorized licensee of Major League
Baseball Properties to contain approximately 17 batting stalls facing a home
run wall designed to replicate major league facilities in a full-size batting
stadium.
Go cart racing tracks, as an authorized NASCAR licensee, to be
comprised of three different track formats: Tri-Oval, Road Course and Junior
Oval. The different formats will have a combined capacity of 125 karts with
an instant capacity of 25 karts per track. The driver will have the option to
drive either a 5/8-scale NASCAR Craftsman Truck Series replica, or Junior
Stock Car replica. The Official Go-Karts of the NASCAR SpeedPark are
currently being engineered and will be manufactured by Xxxxx Racing of
Livonia, Michigan. The NASCAR SpeedPark will also be comprised of a Garage
Experience, Pit Row/Pit Stop Challenge, Victory Lane/Winner's Circle,
Tailgaters Picnic Grounds, NASCAR Retail Trackside Hauler, Video Arcade and
Virtual Reality Zone, Snack Bar, Indoor Retail Area, and Grandstands with a
Press Box Tower.
A 80,000 square foot sports and retail pavilion to include: a
large Sports Arena for basketball, tennis and/or roller-blading (together with
skyboxes, broadcast facilities, bleachers); a food court; a two tiered
restaurant and bar; party rooms and a variety of retail and ancillary
entertainment areas.
The parties acknowledge that the licensing arrangements and
entertainment facilities described above may change over the course of the
Term of this Agreement. Owners agree to use all reasonable commercial efforts
to maintain relationships with nationally recognized professional sports
leagues and organizations as sponsors or licensors for its entertainment
facilities and events.
(b) (ii) Developer represents that: (i) it has obtained licensing
rights from Callaway Golf Company, NASCAR and Major League Baseball and that
it has provided Contractor with accurate copies of such agreements; (ii) the
Drawings for the entire Park have been completed and construction of the
entire project shall be completed in accordance with the Drawings and all
Legal Requirements by March 1, 1998; and (iii) all interior building areas
will be fully ventilated and air conditioned for the comfort of the patrons.
2.2 DEVELOPMENT OF FOOD AND BEVERAGE FACILITIES.
(a) In connection with all Food Service Facilities for the Callaway
Golf Center, the LLC will provide at its sole cost and expense, and in
connection with all Food Service Facilities for the All-American SportPark,
Developer will provide at its respective sole cost and expense, all necessary
building structure and shell components; all exterior and interior demising
walls; ceilings and floors (except for floors on xxx xxxxxx xxxxx xxxx xxxxx
xxxx); primary power to such facilities; all Utility Systems (and related
items delineated in Section 1.1 above) stubbed through slab or through the
interior side of exterior walls; all transformers and primary electrical panel
boxes; under slab drains for each Food Service Facility per Legal Requirements
(but Contractor will be responsible for connecting fixtures and equipment to
drains); sprinkler systems and runs (but no drops or heads); all base HVAC
systems (including primary supply and return ducts to Contractor's Food
Service Facilities) (with base units set on roof at 250 square feet per ton);
all restrooms (except as described below); and exterior patios, decks,
terraces and cabanas (all of which shall be built on pavers and covered). The
slabs for the ground floor food court area shall be blocked out by Developer.
Contractor shall pour that portion of the floor.
(b) Contractor will expend approximately $3.85MM in Development Costs
for its "Leasehold Improvements" and Food Service Assets for the Food Service
Facilities. Contractor's Leasehold Improvements include the following work:
interior non-demising walls and ceilings (to the extent required by design);
wall, floor, ceiling, and window treatments and finishes; all millwork,
counters, bars, shelving, display cases and cabinetry; mirrors, furnishings,
decorations and memorabilia, lighting, signage and menu boards; sprinkler
drops and heads, subpanels for electricity as required, grease traps, and HVAC
interior ductwork defusers and lighting fixtures. Contractor will be
responsible for construction of interior restrooms for the Arena Restaurant up
to a maximum of $50,000 within the $3.85MM budget. In connection with the
foregoing, Contractor will obtain and retain the Food Service Design Rights
and shall use the logo of its affiliate, the "Boston Garden" for the Arena
Restaurant, with the understanding that any and all such logo and trademarks
shall be removed by Contractor upon termination of this Agreement.
(c) To the extent that Food Service Facilities are not substantially
completed for the opening of Callaway Golf Center or the All-American
SportPark, respectively, Contractor will use all reasonable commercial efforts
to provide food and beverage services from temporary facilities on or about
October 1, 1997.
2.3 SUBMISSION OF PROPOSAL FOR FOOD SERVICE FACILITIES.
Within 30 days following execution of this Agreement, Contractor shall
submit to Developer conceptual plans and elevations for each of the Food
Service Facilities associated with the Callaway Golf Center. Contractor shall
submit a Proposal for the Food Service Facilities for the All-American
SportPark ("Proposal") within 30 days following receipt of Developer's
request for same and satisfaction of the Conditions Precedent described in
Section 13.7. In each case Developer shall complete a review of the
applicable Proposal and within ten (10) days after submission, either approve
the Proposal or advise Contractor in writing and with reasonable specificity
the reason(s) for non-approval. In the latter event, Developer and
Contractor, by their appropriate representatives shall proceed with due
diligence and good faith to meet and resolve outstanding issues so that the
Proposal (as they may be revised) are approved. If such approval is not
obtained within one hundred and twenty (120) days following the original
submission date, Contractor may, at its option, terminate this Agreement upon
ten (10) days' written notice to Developer.
Within 45 days following receipt of approval by Developer of each
Proposal, respectively, Contractor shall prepare its basic layout drawings,
furniture and equipment layout, reflective ceiling plans and representative
sample boards ("Schematic Designs") for the Food Service Facilities and submit
them to Developer for review. Developer shall provide Contractor with any
requests for technical or aesthetic changes within 10 days of receipt of such
Schematic Designs. Such requests will be made only in good faith and shall be
consistent with the previously approved Proposal. If Developer requests
changes, the parties by their appropriate representative shall proceed with
due diligence and good faith to meet and resolve outstanding issues so that
the Contractor can proceed with development of Construction Drawings.
2.4 SUBMISSION OF PLANS AND SPECIFICATIONS FOR INITIAL IMPROVEMENTS.
Based on such discussions, Contractor shall prepare and deliver to
Developer for its records the Construction Drawings for completion of the
applicable Food Service Facility within 30 days following receipt of
Developer's approval/or requests for changes related to the Schematic Designs.
2.5 COMPLETION OF INITIAL IMPROVEMENTS.
Upon submittal of the Construction Drawings, Contractor shall commence
construction in accordance with such Construction Drawings for the Food
Service Facilities including, but not limited to, items of decor, and all
other Concession Assets and supplies necessary in the proper conduct of
Contractor's business. Construction of each Food Service Facility shall be
substantially completed within 120 days following completion of the applicable
Construction Drawings and receipt of appropriate construction permits.
2.6 CERTIFIED DEVELOPMENT COSTS.
Within one hundred eighty (180) days after substantial completion of the
Food Service Facilities, Contractor shall provide Developer with a certified
statement setting out the total Development Costs incurred by Contractor,
together with copies of applicable invoices.
2.7 APPROVAL OF PLANS AND SPECIFICATIONS.
All plans for improvements, alterations or renovations, either for the
construction of the Food Service Facilities or any of additional facilities or
alterations to same, shall be prepared, submitted and approved as outlined in
Sections 2.3 - 2.5 hereof, and shall be subject to the same restrictions as
provided herein. Contractor, at its sole expense, must obtain appropriate
approval from all local, state, and federal agencies, as required, for the
completion of any and all improvements.
(a) All plans for improvements shall be prepared by registered
engineers and architects.
(b) All improvements shall be planned and constructed in accordance
with all Legal Requirements.
(c) Upon completion of any construction project, Contractor shall
provide Developer with one (1) complete set of as-built drawings in
reproducible form.
2.8 WAGE RATES. Contractor will be provided with a non-union gate
for use by Contractor's general construction contractor and its
subcontractors. In the event that Contractor's general contractor and/or its
subcontractors are required to pay "prevailing wages" (as that term is
generally defined under federal law) or honor conditions of employment imposed
under a collective bargaining agreement and the aggregate amount expended by
Contractor for Development Costs exceeds $3,850,000, the term of this
Agreement shall be extended by 30 days for each $33,000 spent in excess of
$3,850,000.
2.9 TITLE. Contractor shall retain title to all Food Service Assets
throughout the term of this Agreement. However, upon expiration or
termination, Contractor shall be obligated to sell same to Owner(s) in
accordance with Section 8.5 of this Agreement.
Contractor shall retain title to all Food Service Design Rights and upon
termination shall have the right to remove all signage, logos and
distinguishing decorations provided that it does so within 60 days following
any such termination.
ARTICLE III
Grant of Rights and Term
3.1 SCOPE: (a) Subject to the terms of Sections 3.1(c) and Article
IV below, Owners, jointly and severally, hereby grant the Contractor the sole
and exclusive right to prepare, present, promote, and sell any and all
Refreshments in , on and about the Park during the Term of this Agreement.
(b) Sales shall be conducted from the Food Service Facilities within
the Park once same are constructed, through vending throughout the Park,
through the use of Mobile Stands and Vending Machines and through Catering
Services provided within and about the Park.
(c) Except as described below, no one shall sell or be permitted to
sell or distribute any Refreshments within and about the Park, except by or
through Contractor.
(d) Contractor agrees to provide the above described services during
all regular operating hours of the Park and, as needed at Events, on the terms
and conditions set forth in this Agreement as herein contained. The level and
type of service shall be appropriate for the anticipated attendance.
(e) Except as described in this Agreement, the Contractor shall have
no right to use the Park Design Rights. Use of Food Service Design Rights
and/or use of signage for Branded Products or to promote any Refreshments sold
by Contractor shall not be considered prohibited under this provision.
(f) The parties acknowledge that under Nevada Law, Contractor might
be able to install a limited number of slot machines and/or video gaming
devices in the Clubhouse Restaurant and/or the Arena Restaurant.
Notwithstanding the foregoing, the scope of rights granted hereunder shall not
include gaming activities without the express prior consent of the LLC with
respect to the Callaway Golf Center and the Developer with respect to the
All-American SportPark.
3.2 TERM. The initial term (the "Term") of this Agreement shall be
for a period commencing on the date hereof and terminating on the 10th
anniversary of the Substantial Completion Date. Notwithstanding the
foregoing, the parties acknowledge that Contractor's occupancy rights and
Contractor's obligation to provide the Contractor's Services (or so much of
same as permitted by the then state of completion of the Food Service
Facilities) shall commence on the date the Park is first opened for business.
3.3 RIGHT OF FIRST REFUSAL. Contractor will have a right of first
refusal for future Parks to be built by Developer, or its affiliates,
elsewhere. Developer shall provide Contractor with all of the information
Contractor requires concerning any such opportunity and Contractor shall have
the right to review same for a period of 90 days. If Contractor accepts the
offer, the parties shall work together to finalize all terms and conditions
required for consummation of the transaction. If Contractor rejects the
offer, Developer shall be free to select another provider of food services for
the park in question. Upon expiration of this Agreement, Contractor shall
also have a right of first refusal to operate as the exclusive concessionaire
of Refreshments in accordance with the scope of rights granted hereunder.
Upon such expiration, Owners shall have the right to seek other offers.
However, Owners shall give Contractor written notice of any bonafide third
party offer receives and Contractor shall have 30 days to decide whether it
wishes to extend and amend this agreement in accordance with the financial
terms of the offer Owners wish to accept. If Contractor fails to notify
Owners in writing of its decision to so extend and amend, Owners shall be free
to accept the bonafide third party offer. In consideration for the foregoing,
Contractor will pay Developer $100,000 upon satisfaction of the Conditions
Precedent described in Section 13.7 and conditional thereon. A "Second
Payment" of $100,000 shall be paid upon completion of construction of all
necessary Food Service Facilities and commencement of on-site operations by
Contractor and Owner, provided that Contractor is able to complete the work
described in Section 2.2(b) for no more than $3.85MM. If the cost of the work
described in Section 2.2(b) is more than $3.85MM but less than $3.95MM, the
foregoing Second Payment shall be equal to the lessor of $100,000 or the
difference between $3.95MM and the aggregate amount expended. If more than
$3.95MM is expended, no Second Payment will be made.
ARTICLE IV
Owner's Responsibilities
4.1 OPERATION OF PARK. Owners covenant to operate the Park on a year
round, seven day a week basis in accordance with the standards of the industry
on a continuous basis throughout the Term of this Agreement.
4.2 LEASE OF FOOD SERVICE FACILITIES. LLC shall and does hereby
lease to Contractor, for its sole and exclusive use throughout the Term
hereof, all Food Service Facilities shown in the Drawings for the Callaway
Golf Center and all others constructed hereafter in the Callaway Golf Center.
Developer shall and hereby does lease to Contractor, for its sole and
exclusive use throughout the Term hereof, all Food Service Facilities shown in
the Drawings for the All-American SportPark and all others constructed
hereafter in the All-American SportPark. Possession of Food Service
Facilities shall be delivered to Contractor upon completion of the work
described in Sections 2.1(a) and 2.2(a). Contractor's right of occupancy to
all Food Service Facilities shall be a leasehold interest, granted by each
Owner, respectively, in consideration of the services to be rendered by
Contractor for Owners hereunder and each Owner warrants that for so long as
Contractor fulfills its obligations under this Agreement and (subject to any
Condemnation or Casualty Event (as those terms are hereinafter defined in
Article XI or Article IX)), Contractor shall and may peacefully and quietly
have, hold and enjoy all of the respective Food Service Facilities (now
contemplated and/or hereafter constructed), to the exclusion of all others,
for the Term of this Agreement. In addition, throughout the Term hereof,
Contractor shall have the right to occupy and use on a non-exclusive basis all
Common Areas of the Park in common with others using the Park. Owners agree
to execute appropriate short form notices or memorandums of lease for filing
on the appropriate land records in the form of Exhibit B. Contractor shall
retain title to all of its Food Service Assets.
(a) Owners reserve a right of access to the Food Service Facilities
for themselves and their authorized agents, representatives, and contractors
for the limited purposes of inspecting, maintaining and repairing the
structural components of the Food Service Facilities and/or their Utility
Systems and for the purposes of maintaining health, safety and security
standards throughout the Park. Upon the expiration of the Term or the earlier
termination of this Agreement, Contractor shall surrender the Food Service
Facilities in good order, condition and repair except for ordinary wear and
tear and deficiencies in repair, maintenance and replacement for which Owners
are responsible pursuant to the further terms hereof.
(b) Location of all Mobile Stands and auxiliary storage space
required by Contractor, from time to time, shall be approved in writing by the
Owner which controls the applicable location. Owners reserve the right to
require the Contractor to move Mobile Stands and to relocate items from any
auxiliary storage space when needs of an Event require the use of them.
(c) Contractor hereby irrevocably assigns to Owner(s) any award,
compensation or insurance payment to which Contractor may become entitled by
reason of the leasehold granted to Contractor hereunder in the event of a
Casualty or Condemnation (each as hereinafter defined) other than any
insurance payment received by Contractor under a policy maintained by
Contractor.
(d) Subject to the terms of Articles IX and XI, Owners, at their sole
cost and expense, shall be responsible for the repair and maintenance of the
Park, including but not limited to all structural components of the Food
Service Facilities, all Utility Systems (and all components installed and/or
constructed by Owners, or either of them, under Section 2.2(a)) of the Food
Service Facilities.
4.3 SECURITY. Owners shall be fully responsible, at its sole cost
and expense, for providing all necessary security forces for crowd control
and/or to fulfill Legal Requirements of any Governmental Authority.
4.4 ATTENDANCE INFORMATION. Owners agree to furnish to Contractor
daily with a statement of daily turnstile count showing the total number of
paid and free admissions and passes (to the extent such information is
available). Owner shall also provide Contractor with any advance ticket sales
information as same becomes available.
4.5 ACCESS. Owners shall provide Contractor's personnel with ready
ingress and egress to and from the Park, without charge, during the term
hereof in order to enable Contractor to maintain the interior of its Food
Service Facilities and its Food Service Assets, and to maintain inventory and
product. Free parking will be provided for Contractor's executive staff.
4.6 THIRD PARTY VENDORS. Vendors, peddlers, or Persons other than
Contractor's employees, shall not be permitted to vend, otherwise sell, or
distribute any Refreshments at or within the Park, and Owners shall, at all
times, see to their dispersal, to the extent Owners can legally do so. Except
as permitted under Section 3.1(c) above, neither Owners nor their licensees
will sell or distribute Refreshments within the Park or the Park site, nor
will patrons be permitted to bring Refreshments into the Park or the parking
areas abutting same. To the extent they can legally do so, Owners will
enforce this provision within all parking lots servicing the Park.
4.7 UTILITY SERVICES. Full and unimpeded use of all Utility Systems
shall be provided to Contractor at no cost, except Contractor shall be
responsible for all applicable metered gas and electrical charges incurred in
operation of its kitchen facilities.
Owners, under no circumstances, shall be liable to Contractor, in damages
or otherwise, for any interruption of any of the above Utility Services.
However, Owners shall use all reasonable efforts to restore as promptly as
possible to full service any Utility Service which is interrupted.
4.8 NO CONSENTS. Owners represent and warrant to Contractor that
there are no consents required from any third party including any other
Governmental Authority to the terms, conditions or effectiveness of this
Agreement except for Landlord and Callaway Golf Company.
4.9 CLEANING AND MAINTENANCE. Owners shall be responsible for all
cleaning and maintenance of the Park and all public areas of the Food Service
Facilities, excluding only the commissary areas, and inside concession stands
and bars, kitchen and office areas and inside the public serving areas of the
restaurants. Owners will be responsible for cleaning all patio areas.
However, Contractor shall bus all tables.
ARTICLE V
Contractor's Rent and Other Duties
5.1 CONTRACTOR'S RENT.
(a) Contractor agrees to pay Developer the following Rent with
respect to Concession Sales:
(i) for the first $1,700,000 in annual
Concession Sales 12%
(ii) for all annual Concession Sales in
excess of $1,700,000 but less than
$2,000,000 14%
(iii) for all annual Concession Sales
in excess of $2,000,000 but less
than $2,500,000 15%
(iv) for all annual Concession Sales in
excess $2,500,000 but less than
$3,000,000 17%
(v) for all annual Concession Sales in
excess of $3,000,000 20%
(b) Contractor agrees to pay Developer as rent with respect to
all Gross Receipts derived from the sale of Refreshments in the Arena
Restaurant:
(i) for the first $1,500,000 in annual
Gross Receipts derived from the
sale of Refreshments in the Arena
Restaurant 5%
(ii) for all annual Gross Receipts derived
from the sale of Refreshments in the
Arena Restaurant in excess of $1,500,000
but less than $2,500,000 6%
(iii) for all annual Gross Receipts derived
from the sale of Refreshments in the
Arena Restaurant in excess of $2,500,000 7%
(c) Contractor agrees to pay the LLC as rent with respect to
Clubhouse Sales, 6% of all Clubhouse Sales generated on and after the
Substantial Completion Date of the Clubhouse.
(d) Contractor agrees to pay the following rent with respect to
all Gross Receipts derived from the sale of Refreshments through the use of
Mobile Stands:
(i) Prior to the Substantial Completion Date or November 1,
1997 (whichever shall earlier occur) the rental rate with respect to Gross
Receipts derived from Mobile Stands shall be 6%.
(ii) For the first $500,000 in annual Gross Receipts
derived from the sale of Refreshments from Mobile Stands after the Substantial
Completion Date or November 1, 1997 (whichever shall earlier occur) the rental
rate shall be 12%.
(iii) For all annual Gross Receipts derived from the Sale
of Refreshments from Mobile Stands after the Substantial Completion Date or
November 1, 1997 (whichever shall earlier occur) in excess of $500,000 shall
be 15%.
The foregoing rents shall be paid to the Owner controlling the
site where the applicable Mobile Stands are located.
(e) Except as described below, Contractor agrees to pay
Developer the following rent with respect to Catering Sales:
(i) for the first $500,000 in annual
Catering Sales 12%
(ii) for all annual Catering Sales in excess
of $500,000 15%
Any Catering Services performed in either the Arena Restaurant
or the Clubhouse (including any outdoor area serviced from either location)
shall be commissionable under this subsection (e) and not under subsection (b)
or (c) above. However, the rent for any Catering Services performed in the
Club house or on the grounds of the Callaway Golf Center shall be paid to the
LLC instead of to Developer. Rents for Outside Catering shall be payable to
the Owner controlling the site providing the services.
(f) Contractor agrees to pay as rent with respect to all Vending
Machines operated by Contractor (or its designee) a sum equal to fifty (50%)
of the net amount collected (i.e. Gross Receipts less all applicable costs if
Contractor operates the machines) or fifty percent (50%) of the net amount
collected from any subcontractor retained to provide such services. The
foregoing rents shall be paid to the Owner controlling the site where the
applicable Vending Machines are located.
(g) Contractor agrees to pay its pro-rata share of charges for
Utility Services and Utility usage fees, common area maintenance and cleaning
costs associated with the Park based on its percentage of the total useable
square footage of the Park, up to a maximum payment equal to 4% of
Contractor's Gross Receipts. Such payment shall be made to Developer.
(h) Rents under this Section 5.1 payable hereunder shall be
computed separately for each Owner on a monthly basis and shall be paid on the
20th day of the month following the month in which the applicable sales occur.
(i) For purposes of this Section 5.1, "Annual" shall mean the
Fiscal Year of this Agreement.
(j) To the extent Gross Receipts at an Event can be allocated to
a specific category of sales described herein because payment is received
specifically for such category, the rental rate shall be that associated with
such category. If Gross Receipts for an Event cannot be allocated (such as
when the sponsoring group pays a lump sum for use of all facilities), the
applicable rental rate shall be that described in Section 5.1(e) above.
(k) Contractor shall have the right to deduct from and offset
against any and all Rent payable under Section 5.1 hereof, all sums due and
payable to Contractor from Owners, or either of them, from time to time, for
any goods and/or services supplied Owners, or either of them, from time to
time, and for any Occupancy Taxes paid by Contractor, it being the intent of
the parties that Owners shall be responsible for any such taxes, whether
assessed against Owners or Contractor.
5.2 RECORDS, ACCOUNTING AND AUDIT.
(a) Contractor will keep at its headquarters at the Park adequate and
accurate accounting books and records prepared in accordance with GAAP of all
business and transactions conducted under this Agreement, for all periods
included within the Term of this Agreement, said records to include without
limitation the daily receipts, the daily bank deposits, the daily sales and
business done by the Contractor and Contractor shall preserve and make
available for audit and examination by the Owner all of such records relating
to the performance by Contractor of its obligations under this Agreement.
Such records will be maintained for two years following completion of
operations for each year.
(b) Contractor shall maintain such accounting records on a Fiscal
Year basis.
(c) Throughout the Term of this Agreement, Contractor shall submit to
Developer, within ninety (90) days after the end of each Fiscal Year a report
of all Gross Receipts for the prior Fiscal Year in the following categories:
Concession Sales, Catering Sales, Arena Restaurant Sales, Clubhouse Sales and
Mobile Stand Sales (the "Sales Categories") certified by the chief financial
officer of Contractor. In the event that Developer is not satisfied with the
statements presented hereunder, Developer shall have the right to conduct a
special audit of the Contractor's books and records related to the Gross
Receipts, by auditors selected by Developer, provided it does so within 24
months following receipt of the above described financial statement. Should
such audit(s) uncover a deficiency or deficiencies in payments by Contractor
for any period covered, Contractor shall pay to the Owner to which such
payment is due the amount of such payment deficiency within 20 days following
receipt of the audit report and interest on the deficiency at the Default Rate
from the applicable due date. If such payment deficiency is in excess of five
percent of the aggregate amount reported, the cost of the audit shall be
immediately due and payable by the Contractor. The foregoing shall not apply
with respect to any potential "deficiency" which is the result of a
disagreement between the parties unless and until such disagreement is
resolved in favor of Owner(s).
(d) Contractor must submit to each Owner monthly by the twentieth
(20th) of the following month a report showing Gross Receipts in the Sales
Categories described above.
5.3 PERSONNEL. Contractor will hire, train and supervise, discipline
and, if need be, dismiss all persons necessary to operate the Contractor's
Services hereunder and will use all reasonable efforts to assure that its
employees continually practice high standards of cleanliness, safety, courtesy
and service customary in the industry. Training shall include: customer
service, alcohol awareness, emergency procedures, health, safety, and
sanitation practices. Employees of Contractor shall wear neat and clean
uniforms displaying the Park's logo, but identifying themselves as
Contractor's employees. Such uniforms shall be of a design reasonably
satisfactory to both parties. Determining appropriate staffing levels and
disposition of employees shall be Contractor's sole responsibility.
Contractor shall appoint a general manager for Contractor's Services who
shall be responsible for participation in Owner's budget process and shall
report to representatives of Owners as shall be designated from time to time.
The general manager so designated by Contractor shall participate in periodic
meetings with Owners to review all matters pertaining to the design,
operation, financial results and marketing and quality of Contractor's
Services. Such general manager shall work at the Park on a full time basis
and shall maintain his offices at the Park.
Neither Contractor, nor any Affiliate of Contractor performing services
under this Agreement, shall knowingly discriminate against any employee or
applicant for employment because of age, race, creed, sex, color, disability
or national origin, and Contractor and its Affiliates shall take affirmative
action to ensure that any employee or applicant for employment is afforded
equal employment opportunities, without discrimination because of age, race,
creed, sex, color, disability or national origin. Such action shall be taken
with reference to, but not limited to, recruitment, employment, job
assignment, promotion, upgrading, demotion, transfer, layoff or termination,
rates of pay or other forms of compensation in selection for training or
retraining, including on the job training. Contractor shall require that its
employees comply with Owner's general standards of conduct and customer
service. Subject to compliance with such obligations, Contractor shall have
plenary power with respect to the hiring and discharge of its employees.
Owners shall not assume any obligations of Contractor to its employees,
and all such obligations shall be the obligations of Contractor.
The Contractor will participate in all of the Owners' "guest
satisfaction" research and management programs and department reward and
recognitions programs related to guest satisfaction. The Contractor's full
time and seasonal employees shall be required to attend the Owners' guest
services orientation program which emphasizes safety, service and quality.
5.4 LICENSES AND PERMITS. Contractor shall obtain no later than the
Substantial Completion Date, and thereafter, maintain in force during the
Term of this Agreement, all necessary food, liquor and other licenses and
permits and renewals thereof, provided that the Park's building structures,
Utility Systems and transportation pathways and systems are in compliance with
all Legal Requirements. Contractor shall pay fees and taxes which may be due
and owing, from time to time, to federal, state or municipal authorities
incidental to Contractor's Services. Owners agree to cooperate with
Contractor in connection with filing applications for, and securing and
maintaining in good standing, any and all licenses and permits and renewals
thereof needed by Contractor to fulfill its obligations hereunder.
5.5 COMPLIANCE WITH LAWS, POLICIES AND PROGRAMS. In connection with
the performance of its obligations under this Agreement, Contractor shall at
all times be, and will conduct Contractor's Services, in full and complete
compliance and with any and all Legal Requirements. Contractor shall use all
reasonable commercial efforts to maintain compliance with health code
regulations, maintain no less than a B rating as determined by the County
Health Department, and shall take all reasonable actions to cure any
deficiencies promptly upon receipt of notification of same.
Owners specifically grant to Contractor:
(i) The right to enforce all Nevada laws, rules, regulations or
orders relating to premises licensed to sell and serve alcoholic beverages and
enforce all rules, regulations or orders of applicable Governmental
Authorities.
(ii) Full right, power and authority to take any and all actions
necessary to enable and to ensure compliance with all laws, rules, regulations
and orders concerning the sale and consumption of alcoholic beverages in the
Park.
5.6 PROCEEDINGS INVOLVING LICENSE AND PERMITS. Contractor shall
promptly advise Owners in writing of any pending or threatened actions against
it, by Governmental Authorities, which seek, or could result in, the
suspension of revocation of any license or permit necessary for its
performance under this Agreement. In the event of any scheduled suspension or
revocation of Contractor's license to serve alcoholic beverages, and if such
suspension or revocation shall not be stayed or appealed in such manner that
will permit Contractor to continue to serve alcoholic beverages at the Park,
then Contractor shall be obligated, subject to the approval of Developer, to
secure an interim licensed bar operator at the Park to enable or permit the
serving of alcoholic beverages. If Contractor has not secured an interim bar
operator or made other arrangements as provided above, within a reasonable
period of time, Developer without waiving any rights which it may otherwise
have hereunder, shall have the right, but not the obligation, to secure an
interim licensed bar operator.
In such event, Contractor will make available to the interim bar
operator, to the extent permitted by applicable law, if any, all supplies of
applicable beverages then in its possession which were intended for sale or
use at the Park, will afford to such interim bar operator the benefit of
supply arrangements for beverages and will make applicable Food Service
Facilities available to such interim bar operator.
Contractor shall be entitled to reimbursement, at its cost, for all
Refreshments furnished to and usable by such interim bar operator and for its
cost and expenses actually and necessarily incurred in rendering the
assistance and cooperation contemplated by the foregoing. Sales of interim
bar operator, if retained by Developer, shall be excluded from Gross Receipts
of Contractor and Contractor shall owe no percentage rent to Owners as a
result of any of such Sales. Contractor shall resume the sale of alcoholic
beverages at the Park upon restoration of the licenses or permits to do so.
5.7 HOURS OF OPERATION. Contractor will open a sufficient number of
Food Service Facilities (based on anticipated attendance and pre-sold ticket
information provided by Owners) to satisfy anticipated patron demand on all
days that the Park is open to the public. The parties covenant to work
together on an on-going basis to ensure that service levels are maintained to
mutually satisfactory levels.
5.8 MAINTENANCE AND REFUSE. Contractor shall be responsible for the
operation of its Food Service Assets and all maintenance, repair , upkeep and
replacement thereof. Contractor shall use reasonable efforts to keep the
private areas (i.e. . . kitchens, offices, commissary areas, and the interior
of stands and bars) of the Food Service Facilities neat and clean. Contractor
will not permit its employees to dispose of or discharge waste, garbage or
refuse in any area in or outside the Park other than in areas specifically
designated therefor.
All of Contractor's refuse shall be removed by Contractor to the central
refuse collection point for the Park on a regular basis. In addition,
Contractor shall be responsible for cleaning the private areas of the Food
Service Facilities and for any and all necessary pest control and sanitation
activities, on a regular and continuing basis. Maintenance and cleaning of
public portions of the Food Service Facilities and all outside areas such as
cabanas, patios, terraces and decks shall be the responsibility of Owner.
Both Owners and Contractor agree not to use Hazardous Substances at the
Park except in accordance with all applicable Legal Requirements and each of
them agrees to indemnify, defend, and hold the other party harmless for all
losses, costs, damages, liabilities and expenses arising out of its use,
generation or storage of Hazardous Substances at the Park.
5.9 DELIVERIES. All deliveries of Refreshments and other items used
or sold by Contractor at the Park shall be made only during normal operating
hours and shall be made through a gate or gates designated by Developer.
Acceptance of deliveries shall be solely Contractor's responsibility.
Contractor shall use reasonable efforts to prevent the entry of any
unauthorized persons into the Park through such gate or gates when open for
purpose of such deliveries.
5.10 MECHANICS LIEN. Contractor shall at all times protect and keep
the Food Service Facilities and any property of Owners free and clear of all
mechanics and other liens, attachments, encumbrances, or claims arising out of
Food Service Services hereunder, its performance under this Agreement, and/or
its use of the Concession Facilities. In the event any such lien is placed,
or such encumbrances created, Contractor shall use all reasonable efforts to
attempt to have them removed, and if necessary, shall provide the applicable
Owner with a bond or other reasonable security. Nothing in this Agreement
shall be construed to authorize or permit Contractor to create any lien or
encumbrance on the Park or any portion thereof including the Food Service
Facilities.
5.11 PRODUCTS. Contractor agrees that it will have available at all
times sufficient quantities and varieties of pure and wholesome Refreshments.
Subject to Developer's reasonable approval, Contractor shall be entitled to
use and promote any "private brand products" Contractor may own or control.
Contractor will post menus, with prices, in conspicuous places within or
adjacent to the Food Service Facilities. The menu design shall be subject to
Developer's reasonable approval.
5.12 SPONSOR AND BRANDED PRODUCTS. Developer shall have the right to
require Contractor to sell certain food and/or non-alcoholic products or
Branded Products and to otherwise take innovative action to increase sales
and/or improve customer satisfaction, provided that Contractor's percentage
fees (as delineated in Section 5.1 above) with respect to such items is
equitably reduced to take into account any differential between the cost of
product (including but not limited to applicable licensing, franchise and/or
advertising fees) for such item and the average price of similar items
Contractor is then selling. Contractor will not be required to sell Branded
Products if any capital investment is necessary.
5.13 SUBLEASING. Contractor shall have the right to license Food
Service Facilities to third party vendors (including both private and
charitable and/or not-for-profit organizations), provided that Developer shall
have in its sole discretion first approved in writing such license, the
products to be sold, the decor used, and any right's fee to be collected on
Owner's behalf.
5.14 INDEPENDENT CONTRACTORS. Contractor shall be an independent
contractor under this Agreement and solely responsible for its own employees,
agents and other representatives. This Agreement does not give rise to a
partnership or joint venture among the parties hereto.
5.15 OPERATING PLAN. On or before January 1st of each Fiscal Year,
Contractor shall provide to Developer an operating plan that will include the
following: menus and prices, proposed improvements, if any, a list of
promotional items, if any, and Contractor's plan with respect to management
and staffing. Any changes in such plan must be submitted to the Developer for
approval. The Owner agrees not to unreasonably withhold its consent.
5.16 SALES AT COST. Contractor will sell to each Owner Refreshments
(except for alcoholic beverages) provided same is for consumption and not
resale at Contractor's aggregate cost of production and service. Payment
shall be due on a monthly basis. Contractor shall provide Owners with a
monthly report and shall deduct what it is due from rents otherwise payable
hereunder.
ARTICLE VI
Indemnification and Insurance
6.1 INDEMNIFICATION:
(a) The Contractor shall and does agree to indemnify, protect,
defend and hold harmless the Indemnities for, from and against all
liabilities, claims, damages, losses, liens, fines, penalties, costs, causes
of action, suits, judgments and expenses (including court costs, attorney fees
and costs of investigation), of any nature, kind or description ("Damages") to
the extent such Damages arise, directly or indirectly out of, or are caused
by, or result from: (1) the services performed by Contractor at the Park; (2)
Contractor's performance under this Agreement; or (3) any act or omission of
Contractor, its Affiliate or anyone directly or indirectly employed by it.
(b) Each Owner hereby agrees to indemnify, defend and hold
harmless Contractor and any Affiliate thereof and all directors, officers,
employees and agents of each of the foregoing (collectively "Contractor
Indemnitees"), from and against all Damages asserted against, imposed upon or
incurred by any of the Contractor Indemnitees, to the extent such Damages
arise; directly or indirectly, out of or are caused by, or result from any of
the following:
(i) Any breach by such Owner of any of its representations,
warranties, covenants, or agreements made in this Agreement.
(ii) The performance (or nonperformance) by such Owner of
its obligations hereunder, except any Damages resulting from the negligent
acts or omissions of Contractor.
(iii) Any attempt or threat (regardless of whether
successful and regardless of whether litigation is commenced) by any person or
entity to cause or require Contractor to pay or discharge any actual or
claimed debt, obligation, liability or commitment of or associated with such
Owner.
6.2 WAIVER OF SUBROGATION RIGHTS: Notwithstanding any other
provision of this Agreement, it is expressly agreed that neither Owners nor
Contractor (the "First Party") shall be liable to the other (the "Second
Party"), and each Second Party hereto hereby releases and waives all claims,
rights of recovery, and causes of action that either such Second Party or any
party claiming by, through or under such Second Party, by subrogation or
otherwise, may now or hereafter have against the First Party or any of the
First Party's directors, officers, employees, or agents for any loss or damage
that may occur to the Park, the Food Service Facilities (and any and all
improvements thereto), Food Service Assets or any of the contents of the Park,
or for any interruption in its business, if sustained by reason of fire, (even
if such fire is a result of the negligence or gross negligence of the First
Party or any one or more of its directors, officers, employees or agents), or
if sustained by reason of storm damage or the elements, or by other casualty
event to the extent that such loss or damage is of a type that is, by its
nature, recoverable by insurance (including any deductible), regardless of
whether any policy is actually in effect. Both Owners and Contractor shall
cause their respective insurance carriers to include provisions in all
applicable policies authorizing the waiver of any rights by way of subrogation
each might have against the other.
6.3 CONTRACTOR'S INSURANCE. (a) The Contractor shall carry: (i)
Worker's Compensation insurance in such amount as is required by the laws of
the State of Nevada; (ii) liability insurance (commercial, liquor, and
automobile liability coverages) with a combined single limit per occurrence of
not less than $5,000,000 (with no exclusion for liability assumed by contract)
and (iii) blanket crime insurance covering its employees in a minimum amount
of $500,000. The Contractor shall deliver to Developer, as agent for both
Owners, prior to the Commencement Date and then on or prior to, the expiration
date of any then existing policies in the future during the Term hereof, a
certificate of certificates evidencing that such insurance coverages are in
effect for a period of not less than one year from the date of such
certificate. All policies shall contain a clause providing in substance that
such policies shall not be cancelled or any material provisions thereof
amended adversely to Owners unless Owners shall have been first given at least
thirty (30) days advance notice of such termination or of any such proposed
amendment. Contractor shall cause the Indemnities to be named as an
additional insured on its liability insurance policies.
(b) All such policies may be provided under blanket and/or umbrella
policies carried by the Contractor.
(c) The insurance required by Section 6.3(a)(ii) shall be primary
insurance and the insurer shall be liable for the full amount of any loss up
to the total limit of liability required without the right of contribution of
any other insurance coverage held by Owners.
(d) This Section 6.3 is subject to all limitations identified in
Sections 6.1 and 6.2. Nothing in this Section 6.3 shall be construed as
requiring liability coverage and/or indemnification of Owners' negligence or
willful action or omission.
ARTICLE VII
Assignment
7.1 CONTRACTOR'S ASSIGNMENT. The Contractor shall not, without prior
receipt of the express written consent of Owners, assign this Agreement or any
of its duties as Contractor, provided that such written consent shall not be
required where such assignment is to an Affiliate of Contractor. In the event
of an assignment to an affiliate, Contractor shall remain liable for
performance hereunder.
7.2 TRANSFER OF OWNERSHIP. Owners covenant to cause this Agreement
to be assigned to any transferee of the Park (or any portion thereof) and
covenant to cause such transferee to assume its then unfulfilled obligations
hereunder. Upon acceptance of such assignment, such transferee shall be bound
by all of the provisions of this Agreement which are then applicable and shall
be entitled to all of the corresponding rights hereunder and such transferee
shall permit Contractor to continue in occupancy of the Food Service
Facilities and to continue to operate under this Agreement, provided that
Contractor is not in default hereunder, which default has remained uncured or
unremedied after expiration of applicable grace/cure periods described in
Article VIII below.
7.3 ATTORNMENT/NONDISTURBANCE. Contractor agrees that all of its
rights under this Agreement are and will be subject and subordinate to any
rights of the Landlord or any mortgages and/or security instruments that now
exist or may later be placed upon the Park (collectively referred to as
"Senior Interest"). Contractor also agrees that if the holder of any such
Senior Interest ("Holder") or if the "Purchaser" of such Senior Interest at
foreclosure sale, or sale in lieu thereof, requests Contractor to do so,
Contractor shall attorn to and establish direct privity of estate and contract
with and recognize such Holder or Purchaser as Owners' successor under this
Agreement, provided that such Holder or Purchaser agrees to abide by the terms
and conditions hereof. In consideration for the foregoing, Owners covenant to
obtain from any and all of such Holder(s) (including, but not limited to
Landlord), a covenant of nondisturbance for Contractor's benefit in the form
of Exhibit C. Provision for such subordination, attornment and nondisturbance
shall be made in one or more Subordination, Nondisturbance and Attornment
Agreements (as necessary), each in substantially the form of Exhibit C hereto,
which Contractor hereby agrees to enter into and Owners hereby agree to
arrange for such Holder to enter into.
7.4 ESTOPPEL CERTIFICATES. Contractor shall, from time to time, upon
the request of Owners (or either of them) execute and deliver to the
requesting Owner, or the requesting Owner's designee, a statement,
satisfactory to Owner in form and substance, certifying, to the extent true
and ascertainable: (a) that this Agreement constitutes the entire agreement
between Owner(s) and Contractor and is unmodified and in full force and effect
(or if there have been modification, that the same is in full force and effect
as modified and stating the modifications); (b) the date to which the Rents
hereunder have been paid; (c) that Owner is or Owners are not in default
under this Agreement and that, to the best of Contractor's knowledge, no
circumstance exists which, with the giving of notice, the passage of time, or
both, would constitute a default by Owner(s) hereunder; (d) the expiration
date of the Term; and (e) any other matters relating to the status of this
Agreement or the condition of the Park that Owner(s) may reasonably request.
Such statement shall be delivered to Owner(s) or Owners' designee no later
than twenty (20) business days after Owners' reasonable request therefor.
ARTICLE VIII
Termination
8.1 TERMINATION OF CONTRACTOR. Owners may terminate this Agreement
by written notice to such effect in the event: (a) Contractor fails to
remit, for a period of twenty (20) days after receipt of written notice of
demand therefor, any sums due and owing under this Agreement (except for such
amounts which the Contractor, in good faith, disputes as owing); or (b) the
Contractor fails in a material and substantial manner to perform its
obligations hereunder where the effect thereof is to deprive Owners, in a
substantial and material manner, of the benefits of this Agreement for a
period of twenty (20) days after receipt of written notice specifying the
nature of such default (except where such failure or refusal is due to a
"Force Majeure" as described in Section 12.1 hereof) or (c) "Contractor's
Insolvency" as defined in Section 8.4 shall occur or (d) as expressly provided
elsewhere in this Agreement.
8.2 TERMINATION BY CONTRACTOR.
(a) In the event Owners or either of them fail to fulfill, in any
material and substantial respect, its obligations hereunder and such failure
continues unremedied for thirty (30) days after receipt of written notice of
the particular failure (except where such failure or refusal is due to a
"Force Majeure, as described in Section 12.1 hereof), Contractor may terminate
this Agreement by furnishing Owners with written notice of its intent to do
so.
(b) In addition, Contractor shall have the unilateral right to
terminate this Agreement in the event that:
(i) sufficient financing for the development and construction of
the All-American SportPark is not raised and written evidence of same
presented to Contractor on or before November 30, 1997; or
(ii) the All-American SportPark is not fully operational and
open to the public by February 28, 1998.
Such termination may be effected by written notice of intent to do so
provided that same is delivered to Owners on or before February 28, 1998. If
Contractor exercises its right to terminate in accordance with this provision,
termination shall be effective 30 days following the date of the notice and
the amount payable under Section 8.5(a) shall be equal to 100% of Contractor's
Investment, payable in full upon date of termination. Section 8.3(d) shall
not be applicable to this provision.
8.3 GENERAL CURE PERIOD. If the particular failure to perform under
Section 8.1 or Section 8.2 cannot be cured within the applicable curative
periods provided above, the breaching party shall have a reasonable time
thereafter in which to remedy the problem provided that it is diligently and
continuously making any and all reasonable efforts required to correct the
problem.
8.4 REPOSSESSION, ETC. If this Agreement shall have terminated as
provided in Section 8.1 or 8.2 or if a Contractor Insolvency occurs (whether
or not this Agreement shall have terminated), Owners or their agents or
employees may at any time thereafter either enter upon and repossess the Food
Service Facilities or any part thereof, either by force, summary dispossession
proceedings, ejectment or any suitable action or proceeding at law or
otherwise, and may remove Contractor therefrom. For purposes hereof,
"Contractor Insolvency" means (i) commencement by Contractor of a voluntary
case or other proceeding seeking liquidation, reorganization, moratorium,
dissolution, winding-up or composition or readjustment of its debts or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect, or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or the consent by Contractor to any such
relief or to the appointment of or taking of possession by any such official
in an involuntary case or other proceeding commenced against it or the making
by Contractor of a general assignment for the benefit of creditors, or the
taking by Contractor of any action to authorize any of the foregoing or
indicating its consent to or approval of or acquiescence in any of the
foregoing; or (ii) the commencement of an involuntary case or other proceeding
against Contractor seeking liquidation, reorganization, moratorium,
dissolution, winding-up or composition or readjustment of its debts or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official or it or
any substantial part of its property, which involuntary case or other
proceeding shall remain undismissed or unstayed for a period of 90 consecutive
days.
8.5 SALE OF CONTRACTOR'S ASSETS. Upon termination or expiration of
this agreement for any reason, Contractor shall transfer its Refreshment
inventory; its paper goods and supplies, and cleaning products; its leasehold
interests, its Food Service Assets located at the Park (in the aggregate as
the "Contractor's Then Existing Assets") to Owners and Owners shall pay
Contractor a sum equal to the sum of the following in the aggregate:
(a) Except as described in Section 8.3(b), 110% of the then
undepreciated value of Contractor's Investment at the Park, using a 10 year
straight-line method of depreciation from the Date of Substantial Completion
or the date of installation (whichever shall later occur) of each asset until
the date of termination of this Agreement. For purposes of this provision,
"Contractor's Investment" shall mean the aggregate amount expended by
Contractor for Development Costs for the Food Service Facilities and Food
Service Assets (excluding only those items Contractor intends to remove in
order to protect its Food Service Design Rights) under the terms and
conditions of Article II including the unamortized balance of payments made by
Contractor to Developer under Section 3.3 and all similar capital costs
thereafter expended by Contractor at the Park.
Notwithstanding the foregoing, upon expiration of this Agreement in
accordance with its terms at the 10 year term hereof, the above-described
"buyout" formula shall be reduced to 100% of the then undepreciated value of
Contractor's Investment at the Park, using a 10 year straight-line method of
depreciation from date of installation of each asset.
(b) The invoice cost of then existing Refreshments, supply and paper
goods, cleaning products and Smallwares.
(c) To secure the above described obligation, Owners hereby grant
Contractor a first priority security interest in: (i) any and all sums now
or hereafter payable by Contractor to Owners hereunder; and (ii) all Food
Service Facilities (and related improvements) installed at the Park and the
proceeds thereof (the "Pledged Assets"). Owners further grant Contractor the
right to execute and file any and all UCC-1's or other security filings
Contractor may deem appropriate to perfect Contractor's security interest
without Owners' signature. In the event of occurrence of default hereunder,
Contractor shall have all rights of enforcement against and recourse to the
foregoing Pledged Assets permitted under the Uniform Commercial Code.
(d) In the event of termination during the first five years of the
Term (unless such termination is due to the default of Owners, or either of
them, or unless the termination is effected by Contractor under Section
8.2(b)), upon termination Owners shall have the right to pay the buyout
described above over a four year period, provided they first give Contractor a
duly executed negotiable promissory note and security agreement and related
UCC-1 in a form provided by Contractor. Such security shall cover the Pledged
Assets and the food and beverage sales at the Park. The note shall bear
interest at 10% per annum. Said instruments shall give Contractor a perfected
first priority lien on the Pledged Assets and the food and beverage sales.
Repayment shall be made in 30 consecutive equal monthly payments.
ARTICLE IX
Casualty Event
9.1 After any damage to or destruction of the Park or any portion of
the Park, Contractor shall continue the operation of Contractor's Services in
the Park to the extent practicable from the standpoint of good business. If
Owners shall elect to make any repairs, reconstruction or restoration of any
such damage or destruction, Contractor shall not be entitled to any monetary
or other damages because of any resulting inconvenience or loss. However, the
Term of this Agreement shall be automatically extended in an equitable manner
so that all parties shall have the full operational benefit of operating for
the entire period originally intended under this Agreement. In the event of
partial damages or destruction such extension shall be computed on a pro rata
basis based on the proportionate reduction in Gross Receipts.
Notwithstanding any provision hereof to the contrary, in case of any
damage to or destruction of the Park (i) in connection with any taking or
requisition of the Park or any part thereof or interest therein or any
transfer in lieu thereof (an occurrence of the character described in this
clause (i) being referred to herein as a "Condemnation" under Article XI
hereof) or (ii) arising out of fire, flood or other casualty (an occurrence of
the character referred to in this clause (ii) being referred to herein as a
"Casualty"), Owners shall have no obligation to Contractor to effect any
repair or restoration of such damage or destruction. If Owners fail to
rebuild within 12 months, Contractor shall have the right to terminate this
Agreement by written notice of its election to do so.
ARTICLE X
Arbitration
10.1 Any controversy arising out of or relating to this Agreement, or
relating to any breach hereof, shall be settled by arbitration in Las Vegas,
Nevada in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") then in effect. For disputes involving less
than $500,000, one Arbitrator shall be selected by the "strike-off" method.
Owners, jointly, and Contractor shall have the right to strike off
unacceptable candidates or to prioritize the list of candidates, as the
parties may elect. All disputes involving a sum of $500,000 or more shall be
decided by a panel of 3 arbitrators selected by AAA through its normal panel
presentation process. The award rendered by the Arbitrator(s) shall be final
and judgment upon the award rendered by the Arbitrator(s) may be entered upon
it in any court having jurisdiction thereof. The Arbitrator(s) shall possess
the power to issue mandatory orders, and restraining orders in connection
with such arbitration, including ordering specific performance. The expense
of arbitration shall be borne by the losing party unless otherwise allocated
by the Arbitrator(s). This agreement to arbitrate shall be specifically
enforceable under the prevailing Arbitration Law. During the continuance of
any arbitration proceedings, the parties shall continue to perform their
respective obligations under this Agreement.
ARTICLE XI
Condemnation
11.1 In the event of a taking (for any public or quasi-public use,
under any statute or by right of eminent domain) of (a) all of the Park or (b)
so much of the Park so that it no longer can be used for, or restored as a
Park, Contractor's rights and obligation to perform under the terms and
conditions of this Agreement, shall cease.
11.2 In the event of any other taking of the Park for public or
quasi-public use, under any statute or by right of eminent domain, if the Park
is restored, this Agreement shall continue in full force and effect and the
Term shall be extended in an equitable manner so that both parties will have
the full operational benefit of operating for the entire period originally
contemplated under this Agreement.
ARTICLE XII
Force Majeure
12.1 It is expressly understood and agreed that failure or delay on
the part of any party hereto in the performance in whole, or in part, of the
terms and conditions of this Agreement shall not constitute a breach hereof,
nor a default hereunder, if such failure or delay is attributable to acts of
God, fire, floods, inevitable accident, or riots, insurrection, terrorism,
public commotion, strikes or labor disturbances, embargo, emergency or
governmental orders, regulations, actions, priority or other limitations or
restrictions, or unforeseen cause interfering with personnel, sales, source of
supplies, production, transportation and delivery, or for any cause beyond the
control either party ("Force Majeure). The term of this Agreement shall be
equitably extended in the event that the Park is shut down due to the
occurrence of a Force Majeure for a period of time equal to the shut down
period.
ARTICLE XIII
Miscellaneous
13.1 The Agreement shall be governed in all respect by the laws of
the State of Nevada without regard to such state's position with respect to
Conflict of Laws.
13.2 This Agreement may not be amended or modified except in a
writing and signed by the parties.
13.3 This Agreement and the terms hereof shall be unaffected by any
reorganization, merger, recapitalization or change in structure of either
party or by any transfer, lease, assignment or other change in ownership of
the Park or any portion thereof.
13.4 Where "consent" or "approval" of or "authorization" (in the
aggregate a "Consent") from Owners or Developer is required hereunder, such
Consent shall mean the Consent from Developer's Chief Executive Officer.
Where Consent of Contractor is required hereunder such Consent shall mean that
of Contractor's Chief Executive Officer. Each party agrees that, except as
otherwise provided in this Agreement, whenever prior Consent of a proposed
action is required, it will not unreasonably withhold or delay such Consent.
Failure to provide an explanation for disapproval shall be considered
"unreasonable" per se. Each party also agrees that if it fails to either
approve or disapprove a request for a Consent for a period of twenty (20) days
(after receipt of the written request) or longer, the other party shall have
the right to construe such silence as approval.
13.5 All notices required or permitted to be given under the terms of
this Agreement shall be sent in writing by certified mail, return receipt
requested, hand delivered, or by courier service to the parties hereto at
their addresses set forth below.
To Contractor:
Sierra Sportservice, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
To Guarantor:
Sportservice Corporation
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Office of the President
With a copy to:
General Counsel
Sportservice Corporation
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
To Owners:
Saint Xxxxxxx Golf Corporation
0000 Xxxxx Xxxxxx Xxxx
Xxxxx 00
Xxx Xxxxx, XX 00000
or at such other address or addresses as may be specified by either party
hereto by written notice delivered to the other as provided herein. Any such
notice if sent in accordance with the provisions of this Section 13.5 shall be
deemed the earlier of when received or within five (5) days following the
deposit thereof in the U.S. mails as above provided.
13.6 Any provision of this Agreement prohibited or invalidated by a
court of competent jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without affecting the validity
of the remaining provisions of this Agreement.
13.7 Except as otherwise described in Section 2.3 above, Contractor's
obligations hereunder shall not vest until and unless the afterstated
Conditions Precedent have been satisfied or waived by Contractor:
a) Contractor has been provided with documentary evidence of sources
of funding for the development budget of the Callaway Golf Center;
b) Contractor received fully executed and filed copies of the
memorandum of lease described in Section 4.2 above and confirmation of a first
priority security position by its attorneys;
c) Contractor has received fully executed copies of the
nondisturbance agreements described in Section 7.3 above; and
d) All third party approvals have been received by both parties.
In the event the foregoing has not been received by September 30, 1997,
Contractor shall have the right to terminate this Agreement. Notwithstanding
the foregoing, if Contractor fails to issue notice of termination by September
30, 1997, Contractor shall be deemed to have waived its right to so terminate.
ARTICLE XIV
Guaranties of Payment and Performance
14.1 As a condition and specific inducement to the Owners entering
into this Agreement and in consideration of TEN AND NO/100 DOLLARS ($10.00)
and the benefits to be derived by Guarantor upon the execution and performance
of this Agreement by Contractor through the close affiliation of Guarantor
with Contractor, the receipt and sufficiency of which are hereby acknowledged
and confessed, Guarantor hereby covenants, guarantees and agrees as follows:
(a) Subject to the terms of this Section, Guarantor hereby
guarantees to the Owners the timely payment of all Rent, all sums now or
hereafter due and owing by Contractor pursuant to Section 5.1 or otherwise
under this Agreement, and the full and timely performance and observance of
all of Contractor's other obligations and covenants in accordance with and
subject to the terms and conditions of this Agreement throughout the entire
Term of the Agreement (collectively, the "Guaranteed Obligations"). The
guaranty covenants and obligations pursuant to this Article XIV are and shall
for all purposes be deemed to be a guaranty of payment and performance, and
not merely a guaranty of collection.
(b) If any default is made by Contractor in the payment of any
portion of the Guaranteed Obligations, or if Contractor defaults in the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any portion of the Guaranteed Obligations and such default
continues following notice to Contractor and Guarantor and expiration of
applicable periods for remediation or cure by either Contractor or Guarantor
(such notice and periods as described in Article VIII hereof), Guarantor
shall, pay, perform and/or observe the same, provided that Guarantor shall
enjoy (jointly with Contractor): (i) any and all defenses of Contractor with
respect to any default of the Owners arising out of this Agreement (but
specifically excluding, without limitation, any and all defenses arising, at
law, in equity or otherwise out of the financial incapacity of Contractor
under Bankruptcy Law or otherwise); and (ii) all rights hereunder of
Contractor to enforce the obligations of the Owners described in this
Agreement and the Contractor's rights under this Agreement.
(c) Any act of the Owners consisting of a waiver of any of the
terms or conditions of this Agreement, or the giving of any consent to any
matter or thing relating to this Agreement, or the granting of any indulgence
or extensions of time to Contractor, may be done without notice to Guarantor
and without releasing the obligations of Guarantor hereunder.
(d) It shall not be necessary for the Owners to enforce or seek
to enforce any of its rights and remedies hereunder against Contractor prior
to enforcing or seeking to enforce the same against Guarantor.
(e) Guarantor waives diligence of the Owners or its assignees in
pursuing any remedy against Contractor. Furthermore, the Owners shall not be
required to pursue or exhaust any other remedies before invoking the benefits
of the guaranty provided in this Article XIV and any pursuant of any such
remedies shall in no manner impair or diminish the rights of the Owners under
this Article XIV; however, Guarantor shall have the right to all defenses
otherwise available to Contractor and to enforce, in its own name, all
obligations of the Owners to the Contractor contained in this Agreement and
for purposes of this Guaranty. The Owners acknowledge that it shall not have
the right to allege lack of privity or that Guarantor does not hold the rights
granted to Contractor herein in any action in which Guarantor asserts such
defenses which are so available to Guarantor. Nothing in this Article XIV
shall relieve or be deemed to relieve Contractor in any way of its obligations
and liabilities under this Contract.
14.2 Guarantor agrees that this provisions of Section 13.1 above
shall apply to the provisions of this Article XIV and the performance
hereunder by Guarantor.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
ATTEST: SIERRA SPORTSERVICE, INC.
________________________ By:/s/ Xxxxxx Xxxxx, Secretary/Treasurer
SPORTSERVICE CORPORATION
_________________________ By:/s/ Xxxxxx Xxxxx, Vice President
SAINT XXXXXXX GOLF CORPORATION
_________________________ By:/s/ Xxx Xxxxxx, President
All-AMERICAN GOLF LLC
By: Saint Xxxxxxx Golf Corporation,
its Manager
_________________________ By:/s/ Xxx Xxxxxx, President
EXHIBITS
A = Legal Description of Park
B = Memorandum of Lease
C = Subordination, Nondisturbance & Attornment Agreement
