EXHIBIT 10.11
GAMING MACHINE LEASE AND ADDITIONAL SERVICE AGREEMENT
THIS AGREEMENT is made this 21st of March 1999, by and between
KACHINA GAMING, a division of AutoLend Group, Inc., a New Mexico headquartered
company ("Kachina" or "Lessor"), and the Benevolent Order of the Elks, Xxxxxxx
Xxxxx #000 , x Xxx Xxxxxx nonprofit organization ("Proprietor" or "Lessee"),
located at 000 Xxxxx Xxxxxxxxxx, Xxxxxxx XX 00000.
Preliminary Statement
The State of New Mexico ("State") has adopted the Gaming Control Act which
permits certain nonprofit organizations within the state to possess and
operate gaming machines on their premises for the purpose of raising revenues
for educational and other purposes.
Proprietor is an organization established under New Mexico law which is
qualified to participate in the State's gaming program as a state operator
upon licensing by the State.
Kachina is willing to provide gaming equipment; is familiar with New Mexico
state laws and regulations pertaining to gaming operations, gaming facility
design and set up, and licensing; and has sufficient resources to supply and
assist Proprietor in setting up its gaming machines in strict accordance with
state law upon its licensing as a gaming machine distributor by the State.
Proprietor desires to retain Kachina to assist in setting up its gaming
machine operation ("Project") and provide all gaming equipment.
NOW THEREFORE, in consideration of the mutual promises and undertakings set
forth below, the adequacy and sufficiency of which as consideration to
establish a legally binding contract is expressly acknowledged by both
parties, the parties agree as follows:
1. Kachina's Services. Kachina will provide the following services ("Services")
to Proprietor at the location described in Exhibit A ("Premises"), attached to
this agreement:
A. Lease and deliver gaming laboratory approved gaming machines, computer
software and related equipment, Exhibit B ("Equipment") for Proprietor's
Project;
B. Provide additional services from the following list;
(1) Assist Proprietor in securing all required licenses for its Project;
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(2) Work with Proprietor to determine the appropriate mix, number and type of
gaming machines and design a gaming machine layout in compliance with State
laws and regulations;
(3) Provide training to the Proprietor with regard to compliance with state
laws, rules and regulations; operation and maintenance of gaming machines;
state reporting requirements; and other subjects required for the Proprietor
to legally and successfully operate its Project in compliance with state
laws;
(4) Service gaming machines on a regular and emergency basis within a reasonable
time period, and provide a toll-free phone number for service calls;
(5) Assist Proprietor in preparing reports as required by the State;
(6) Collect gaming machine revenues and pay over to Proprietor all such revenues
after deducting taxes and Kachina's fees as set forth below;
(7) Reimburse Proprietor for state license fees, background investigation fees,
operator license fees and work permit fees during the term of this Agreement
on the gaming equipment furnished to Proprietor;
(8) Provide a "house bank loan" if needed;
(9) Provide a loan for facility improvement to ensure the facility meets all
regulatory requirements.
2. Fees to Kachina as Exclusive Gaming Equipment Supplier. Kachina shall be the
exclusive supplier of all gaming equipment permitted by the Gaming Control Act
to Proprietor and to the Premises for the term of this agreement; and Kachina
shall have exclusive access to the coin and currency boxes on all gaming
machines upon the Premises. Fees shall be as follows:
A. In exchange for the delivery and lease of the machines (as in 1.A. above),
Proprietor shall pay Kachina XXXXX of Net Revenues collected.
B. In exchange for any or all of Kachina's additional services (as in 1.B.
above, or elsewhere in this agreement), Proprietor shall pay Kachina XXXXX of
Net Revenues collected.
"Net Revenues" means the total amount of money wagered less pay out of all
prizes and New Mexico Gaming Taxes. If State law and regulations do not permit
fees to be paid to Kachina as described above, Kachina shall have the option
of withdrawing from the agreement, or eliminating some or all services that
are not specifically detailed in 1.A. above.
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Proprietor shall not be required to make a per machine payment to terminate the
lease; lease termination shall be governed by Section 15. There are no other
fees payable to Kachina other than the percentage payment set out in this
Section.
3. Proprietor's Responsibilities. Proprietor shall allow the gaming machines to
be placed in prominent places within the Premises as soon as such gaming
machines are delivered by Kachina. Proprietor shall provide a comfortable,
secure gaming environment and be open during all legal gaming hours at its sole
expense. Proprietor shall furnish Kachina all necessary electrical outlets and
electricity for the operation of its Equipment at Proprietor's sole expense. In
the event any of the Equipment becomes inoperable, Proprietor agrees to notify
Kachina immediately in order for Kachina to provide service to the Equipment or
to replace the Equipment with the same or similar kind or quality of Equipment.
Kachina and Proprietor shall apply to the Gaming Control Board for
appropriate licenses, and any required renewals, in order to be licensed under
the Gaming Control Act for the purpose of conducting gaming as described in the
Gaming Control Act. Such applications shall be filed as soon as practicable
after forms, rules, and regulations are adopted by the Gaming Control Board.
4. Term. The initial term of this agreement shall be for forty-eight months from
the date first written above. This agreement will automatically renew for an
additional year and upon the same terms and conditions unless, at least 60 days
before the end of the initial term, one party provides the other with written
notice of renegotiation or cancellation of this agreement.
5. Indemnification and Insurance. Proprietor agrees to indemnify Kachina for
damages to or destruction of Kachina's Equipment on the Premises excluding
normal wear and tear. PROPRIETOR WARRANTS THAT IT WILL USE AND CAUSE ALL
EQUIPMENT TO BE USED IN A LAWFUL MANNER.
If Proprietor fails to comply with the terms of this Agreement and as a result
Kachina incurs damages or costs, or , if Proprietor operates the gaming machines
or premises in a fashion which results
in Kachina incurring damages or costs, then, in either of these cases,
Proprietor will hold Kachina (and its members, managers, employees, agents and
its respective successors and permitted assigns) harmless from and against all
damages, liabilities, obligations, deficiencies, claims, actions, demands,
judgments, interest, losses, diminution in value, proceedings, costs and
expenses, all of whatever kind or nature, including, without limitation,
reasonable attorneys fees and other legal costs and expenses.
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Proprietor shall secure and maintain liability insurance in an appropriate
amount, and will demonstrate the existence of such coverage to Kachina.
Proprietor shall also maintain hazard insurance to provide coverage for loss or
damage of Proprietor's equipment and furnishings within the premises. At
Proprietor's sole discretion, Proprietor may choose to broaden such hazard
coverage to include Kachina's gaming machines, then to the extent that the
coverage inclusion of Kachina's machines and equipment increases Proprietor's
hazard policy premiums, Kachina shall reimburse Proprietor for such directly
attributable premium increase.
6. Modification, Illegality and Severability. If the rules and regulations under
the Gaming Control Act or of the Gaming Control Board or other local, state or
federal law or regulations, be such that any provisions herein may be deemed
invalid, then the parties agree to modify the Lease as necessary to bring it
into conformity with those rules and regulations, while maintaining the intent
of the parties to the Lease. Any such modification will not affect the remaining
provisions of the Lease. This agreement shall not be effective until it is
reviewed and approved (either specifically or in generic form) by the New Mexico
Gaming Control Board, in accordance with rule 15 NMAC 1.10.32.4.
7. Service, Observation, and Quantity of Machines. Kachina shall service and
maintain the Equipment and keep it in operable condition. Proprietor shall not
open the gaming devices, physically extract money or tokens from them, or
otherwise tamper with them in any manner.
Kachina maintains the right to decide to repair or replace machines. Lessor
shall decide if the usage volume for the location justifies keeping the maximum
number of machines as permitted by law or if fewer machines is appropriate in
the circumstances.
Kachina and its agents and employees shall have the right to enter into and
upon the Proprietor's premises where the Equipment is located, at all reasonable
times during normal business hours, for the purpose of collecting cash from the
machines, maintenance
and replacing, inspecting, or observing the use of the Equipment. However, under
no circumstances may Kachina interfere with the operation of Proprietor's
business.
8. Ownership. Proprietor warrants that the Equipment leased under this Agreement
is Kachina's sole and exclusive property. Proprietor further warrants that the
Equipment will be located at
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the address first set out above. Proprietor shall have no right or interest in
such Property except as expressly set forth in this Lease. Proprietor shall not
mortgage or encumber the Equipment at any time. If Proprietor leases its
premises from a third party, then Proprietor will use its best efforts to obtain
a Landlord's Lien Waiver with respect to the Equipment. A separate document
providing for such waiver will be provided by Kachina. Any new premises lease
entered into by Proprietor after the execution of this Agreement shall be
required to include such a Landlord's Lien wavier.
Proprietor shall not allow a lien of any nature whatsoever to be filed or
maintained against the Equipment or gaming revenues. If any lien is filed in
contravention of this provision, Proprietor shall notify Kachina and take
immediate steps to remove or satisfy it within 10 days of receipt of notice of
said lien. If such lien is not removed or satisfied within 45 days of its
filing, Kachina may terminate this agreement without further notice, and remove
its Equipment. All Equipment shall bear the name "Kachina Gaming" and shall
state thereon that said Equipment is the sole property of Kachina Gaming.
9. Competitive Equipment. During the term of the Lease, or any renewal term
thereof, Proprietor will not enter into any other agreement, lease, purchase
order, or contract of any kind with any other manufacturer, distributor,
supplier, lessor, or vendor of gaming devices, gaming machines, or any other
type of machines or contrivances which feature gambling methods, nor place upon
its premises any form of such equipment which would compete with the purpose,
use, or operation of the Equipment, unless permission is obtained in writing
from Kachina, which may withhold such permission in its sole discretion for any
reason.
10. Records. The State of New Mexico will require that the gaming devices and
gaming machines be connected to its central accounting system which monitors the
operation of those devices and machines. Proprietor agrees it will cooperate
fully with the State (or any of its agencies) and with Kachina in facilitating
this connection.
Kachina and Proprietor will each maintain separate full and complete books
and records regarding the operation and use of the Property as required by law.
Each party may inspect those books and
records of the other party which pertain to the operation and use of the
Property upon reasonable written notice to that party. Reasonable notice is a
minimum of seven (7) days.
11. Compliance with Gaming Laws. Proprietor warrants it shall not knowingly do
any act which will cause the leased Property of Kachina to be confiscated or
appropriated by any agency of the State of New Mexico, or any other government-
related agency. In
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the event any of the Property leased hereunder is confiscated or appropriated by
any such agency, then the Proprietor shall be responsible to Kachina for the
value of the leased Property confiscated or appropriated, and for any loss of
earnings under this Agreement.
12. Remedies. Both parties acknowledge the remedies at law for breach of this
agreement are inadequate given the highly competitive nature of the gaming
machine industry, and the difficulty of finding alternate locations not
committed to existing agreements. Proprietor further acknowledges the unique
nature of this location. Proprietor further acknowledges that the loss of this
location will result in irreparable harm to Kachina. As a result, the parties
agree that either party may petition a court
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of competent jurisdiction and obtain a restraining order and/or injunction
requiring compliance with the terms of this Agreement. The parties hereto agree
that the proper jurisdiction and venue for any action in court to enforce or
interpret this Agreement shall be the Second Judicial District of New Mexico,
Bernadillo County, New Mexico.
Notwithstanding the foregoing, in the event of a breach by Proprietor, in
addition to any other remedy available, Kachina may elect to terminate this
Agreement and/or remove all Equipment without interference from Proprietor or
its members. In the event that Proprietor were to breech this Agreement AND
engage in gaming without Kachina, then in such case Kachina shall be entitled to
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receive a specific penalty payment from Proprietor. Such a penalty shall be
calculated by computing Kachina's average weekly revenues under this Agreement
(prior to said breach), which average shall then be multiplied by the number of
weeks remaining in the unexpired term of this Agreement. In the case of any
dispute which is ultimately resolved by a court, the prevailing party shall be
entitled to attorneys fees, costs, and pre and post judgment interest at the
post judgment interest rate. No damages or penalties of any kind will be in
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effect under specific situations (described herein) wherein Proprietor no longer
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engages in gaming:
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if Proprietor's national XXXXX umbrella organization closes down Proprietor or
closes gaming by Proprietor; or, if the physical facility becomes unusable due
to some form of destruction; or, if Proprietor is forced to close for financial,
legal, or other reasons. However, if any of the above exceptions occur, and then
Proprietor later re-engages in gaming, then at such time this Agreement will
again become active and in effect, with as many months then remaining as were
remaining when gaming stopped under Kachina.
13. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted assigns.
Kachina may assign this Agreement without limitation and Proprietor agrees to
any assignment by Kachina
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during the term of this Agreement. Proprietor shall not assign this Agreement to
any third party. If Proprietor relocates its business or nonprofit operations,
Proprietor shall allow Kachina, at its option and expense, to transport
Kachina's Equipment (or to deliver similar Equipment) to the new location, under
the same terms and condition set forth in this Agreement.
14. Miscellaneous Terms. In the event that a court of competent jurisdiction
declares any of the conditions or terms herein invalid or unenforceable for any
reason, the remaining provisions shall be given full force and effect. This
Agreement shall be irrevocable by the parties hereto.
Each party to this Agreement warrants and represents that the signatory
hereof on its behalf has full, lawful authority to enter into this agreement.
The parties further certify that there are no reservations or understandings
except as provided in this Agreement. Any prior statements, offers,
representations or understandings are deemed a matter of negotiation only and
are merged into this Agreement which contains the only agreement between the
parties regarding the subject matter described herein. Proprietor further
certifies that there are no contracts or agreements with any other party
regarding the subject matter herein.
15. Termination. This Agreement may be terminated as follows:
(a) By either party for breach of any material term hereof, provided that the
non-breaching party has given written notice of the breach and an
opportunity to the defaulting
party to cure the breach; and further provided that the breaching party has
failed to cure the breach within 20 days of actual
receipt of notice of the breach or in such other time as may be reasonable given
the nature of the default;
(b) By Kachina it, in the thirty-day period following the end of the first six
months of actual gaming operations, Kachlna provides a minimum of 90 days
advance written notice to Proprietor; in such case, Kachina shall have a
one-time option to unilaterally terminate this agreement;
(c) By either party at the end of the initial term of this agreement upon
providing the other party written notice at least 60 days before the
expiration of the initial term.
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16. Notice. Notice under this Agreement shall be deemed sufficient if given by
First Class Mail and facsimile to the address below,
if to Kachina Gaming: if to Proprietor:
Attn.: President Elks, BPOF #969
AutoLend Group, Inc, 000 X. Xxxxxxxxxx Xxxxxx
000 Xxxxxxx XX, 0xx Xxxxx Xxxxxxx, XX 00000
Xxxxxxxxxxx, XX 00000 Attention: Exalted Ruler & Chairman of Trustees
Ph. (000) 000-0000 Ph. (000)-000-0000
Fx. (000) 000-0000 Fx.
THE PARTIES HERETO SIGNIFY THEIR AGREEMENT as evidenced by their signatures
below.
KACHINA GAMING PROPRIETOR
A division of AutoLend Group, Inc. Benevolent Protective Order of Elks,
Xxxxxxx Xxxxx #000
By: Xxxx X. Xxxxxx(signed and typed) Organization
Vice President, Gaming By: Xxxxxxx X. Xxxxxx(signed)
Its Authorized Agent Its Authorized Agent
Xxxxxxx X. Xxxxxx
Name (Printed)
Trustee
Title
Date: 4-1-99
