EXHIBIT 10.15
"RCT" means the material omitted has been filed with the
Securities and Exchange Commission with an application requesting
confidential treatment.
AGREEMENT
THIS AGREEMENT entered into as of the 1st day of September 1997
by and between KMART CORPORATION, a Michigan corporation located
at 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Kmart") and CARDIVAN COMPANY, a Nevada
corporation, located at 0000 Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxx, 00000 (hereinafter referred to as "Cardivan").
WHEREAS, Kmart desires Cardivan to continue the installation,
operation, maintenance and servicing of gaming devices (the
"Devices") in all stores of Kmart in the State of Nevada; and
WHEREAS, Cardivan agrees to take all necessary steps to install,
operate and maintain Devices pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as follows:
1.Cardivan shall install, operate, service and remove subject to
the terms hereof, Devices at the Kmart store locations set forth
on the attached Exhibit A. Should Kmart open or acquire
additional stores within the State of Nevada during the term of
this Agreement, Kmart will use its best efforts to provide to
Cardivan adequate space for the installation and operation of the
maximum number of Devices allowable by law. Cardivan will accept
existing space allocations within existing Kmart stores. However
should Kmart reduce the space allocation in an existing store, a
per Device monthly rent adjustment will be required during the
term of this Agreement. The minimum number of Devices to be
installed and operated in each existing store is detailed on
Exhibit A. Cardivan may elect to reduce or add to the number of
Devices at any location subject to the terms of this Agreement.
Installation, maintenance, removal and replacement of said
Devices shall be performed only at the time specified by the
Kmart district manager of the store involved. The area in which
Devices shall be located in the stores shall be mutually agreed
upon between Kmart and Cardivan.
0.Xx full consideration for the rights hereby granted, Cardivan
shall pay to Kmart the amounts set forth in the attached Exhibit
B for each existing store as of September 1, 1997. All payments
will be made on the first day of each month for the previous
month. The minimum amount to be paid by Cardivan to Kmart for
each store shall be based on the minimum number of Devices listed
in Exhibit B for each store. The minimum monthly fees per store
will be paid by Cardivan even if Cardivan elects to reduce the
number of Devices in a store below the minimum number provided in
Exhibit B. Provided, if Cardivan elects to install additional
Devices in a store above the minimum number listed in Exhibit B
for a store, Cardivan agrees to pay to Kmart an additional amount
for each such Device based on the monthly fee per Device listed
in Exhibit B for the store in which the additional Device(s) is
installed and operated.
Should Kmart open or acquire additional stores in the State of
Nevada during the term of this Agreement, Cardivan shall have the
option within thirty (30) days of notification by Kmart to
Cardivan to exercise its exclusive right to operate Devices
within each of the stores under the terms and conditions of this
Agreement. During the term of this Agreement, the fees due with
respect to such new locations will be based on the actual number
of Devices at such locations at the then applicable monthly fee.
For the RCT period following the date such new location
is open for business by Kmart, the monthly fee per Device shall
be RCT; provided that if Kmart has not taken all steps required
to be taken by it to permit Cardivan to commence operations at
such New Location, the RCT period shall not commence until all
such actions have been taken.
In addition, upon the later of October 1, 1997 or the execution
of this Agreement by the parties, Cardivan agrees to prepay
RCT of fees due under the Agreement (based on the minimum number
of Devices per store) in the total amount of RCT to Kmart. This
figure excludes the Kmart store #3894 located in Elko, Nevada.
Upon receiving licensing for store #3894, Cardivan agrees to
prepay RCT of fees for said store due under this agreement.
3.Payments by Cardivan shall be mailed or delivered to Kmart
Corporation at 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx, XX 00000,
Accounts Receivable - Attn: D. Matyanowski. Kmart may direct
Cardivan to send payments to another address by giving Cardivan
written notice at least thirty days in advance of such address
change. All payments made by Cardivan hereunder shall be
accompanied by a report giving a breakdown by store of the amount
paid and the calendar month to which the payment relates.
Notification of the installation of any new Devices (except
Devices installed to replace old Devices) shall be given to Kmart
at the then current address for payments not less than thirty
(30) days prior to the installation.
4.All Devices installed by Cardivan hereunder and subject to this
Agreement, together with the contents of their cash boxes shall
remain the sole property of Cardivan and Kmart shall acquire no
ownership interest therein. All taxes and assessments of any
kind by reason of or as a condition precedent to the ownership or
operation of Devices by Cardivan in the stores shall be paid
promptly and in full by Cardivan, but Cardivan shall not be
liable for any tax measured by Kmart's income. Cardivan warrants
that prior to installation of any Device hereunder it shall have
paid the proper licensing agency or agencies the licensing fee or
fees necessary for operation of Devices and that it shall have
procured from said agency or agencies all licenses necessary for
operation of Devices. Cardivan agrees that it shall maintain in
force such licenses and pay any and all license fees as they
become due during the term of this Agreement.
Cardivan agrees to reimburse, indemnify, defend and hold Kmart
harmless from and against any damage, loss, expense or penalty or
any claim or action therefore: (1) by or on behalf of any taxing
authority arising out of Cardivan's payment or failure of payment
of any taxes and/or assessments (including license fees) imposed
by reason of or as a condition precedent to the ownership or
operation of the Devices covered hereunder, and (2) as a result
of Cardivan's failure to obtain and/or maintain in force any
licenses necessary for the operation of Devices covered
hereunder.
5.All costs and expenses incurred for the installing, maintaining
and removing of said Devices shall be paid by Cardivan, together
with the costs of restoring to their condition on the date of
installation, reasonable wear and tear excepted, the areas in the
stores occupied by said Devices, which restoration Cardivan
hereby agrees to perform promptly after the removal of any or all
of said Devices and/or upon termination of this Agreement. If
Cardivan fails or refuses to so remove and restore for more than
thirty (30) consecutive calendar days after termination of this
Agreement or its receipt of directions from Kmart to do so, Kmart
may so remove and restore and may place said removed Devices in
public storage in Xxxxx County, Nevada for Cardivan's account and
at Cardivan's risk.
6.Cardivan shall, at its own expense, employ a sufficient number
of persons to supply change or coins (furnished by Cardivan) to
patrons of the Devices at each of the stores covered by this
Agreement. In the event that Kmart deems one or more of
Cardivan's Change Persons or other employees working at a
Location or Locations is conducting themselves in a manner that
is unsatisfactory to Kmart, Kmart may inform Cardivan verbally or
in writing of such conduct. Cardivan shall address the matter
within twenty-four (24) hours with the Affected Employee and
correct the violation. If Kmart notifies Cardivan, verbally or in
writing, of a second incident by the Affected Employee, Cardivan
shall replace the Affected Employee as quickly as possible
subject to existing federal, state and local laws.
7.Cardivan shall service said Devices, and its employees shall be
present to render change service, during the hours when said
store is open to the public.
0.Xx the event an Existing Location is closed for renovation for
a period of thirty (30) days or more, the Fees with respect to
such renovated Existing Location shall be RCT monthly fee RCT
following the date such renovated Existing Location is reopened
for business by Kmart; provided that if Kmart has not taken all
steps required to be taken by it to permit Cardivan to recommence
operations at such Existing Location, the RCT period shall not
commence until all such actions have been taken. Should Cardivan
decline to exercise such option Kmart may license another
operator of Devices for such new store.
9.Cardivan shall be responsible for and does represent that it
shall comply with all federal, state and local laws, rules and
regulations applicable to its operations under this Agreement.
10.Cardivan is and at all times shall be an independent
contractor in the performance of this Agreement. Cardivan will
exercise control over its employees and shall be solely
responsible for the payment of any wages, salaries or other
remuneration of its employees and for the payment of any payroll
taxes, contributions for unemployment insurance, social security,
pensions or annuities which are imposed as a result of the
employment of its employees.
11.The risk of loss, damage, destruction or disappearance of any
property of Cardivan on the premises shall, as between Kmart and
Cardivan, be exclusively that of Cardivan.
12.Cardivan shall not advertise the presence of the Devices
covered by this Agreement, except in accordance with Kmart's
prior written approval.
13.If Kmart decides to alter its smoking policies in the Gaming
Spaces from those currently in effect, Kmart agrees to discuss
the need for such change with Cardivan and to secure Cardivan's
prior written consent for such change, unless and to the extent
such change is required by law or regulation.
14.Cardivan shall reimburse, indemnify, defend and hold Kmart
harmless from and against any damage, loss, expense or penalty or
any claim, demand, action or proceeding therefor by or on behalf
of any person or entity (including Cardivan employees), arising
out of the installation, maintenance, service, existence,
operation, repair or removal of Devices including but not limited
to claims of libel, slander, assault, false arrest, bodily injury
or property damage (hereinafter "such claims"), provided Kmart
gives Cardivan reasonable notice of any such claims made or
brought against Kmart. Cardivan shall assume the defense or other
disposition of any such claims within a reasonable period of time
after notice of same.
15.Cardivan shall provide and maintain in effect during the term
hereof and any extension thereof workers' compensation insurance
covering all employees engaged in its business and in the
installation, maintenance, service, operation, repair or removal
of said Devices, or provide workers' compensation on a self-
insured basis in compliance with applicable Nevada regulations,
and shall likewise provide and maintain public liability
insurance with policy limits of $2,000,000 per occurrence and
aggregate combined for bodily injury and property damages. Kmart
shall be named as an additional insured under said policy or
policies. Such insurance shall specifically protect Cardivan and
Kmart as its interest may appear against the contractual
liability assumed by Cardivan hereunder, and certificates of such
insurance shall be promptly delivered to Kmart.
16.Cardivan will indemnify and save Kmart harmless from and
against all claims, demands or actions arising out of
infringement or alleged infringement of U.S. Patents, copyrights,
trademark or servicemark rights if such claims, demands or
actions are made or brought against Kmart as a result of the
presence of said Devices in its stores.
17.Notices hereunder for Cardivan shall be directed to it at 0000
Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, Attn: Senior Vice
President - Operations and notices for Kmart shall be directed to
it at 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxx, Xxxxxxxx 00000, Attn:
General Counsel or to such other addresses as either party may
hereafter specify in writing. Notices shall be effective on the
date recipient signs for receipt of said notice.
18.The entire understanding of the parties with relation to the
subject matter hereof is contained herein. No modification of
this Agreement shall be effective unless made in writing and
signed by both parties. Neither party shall assign this Agreement
or any interest in it or assign or subcontract the performance of
any obligation hereunder without the prior written consent of the
other party; subject to such prior written consent, this
Agreement shall bind the successors and assigns of both parties.
19.This Agreement shall become effective as of September 1, 1997
and shall expire on RCT. Either party may terminate this
Agreement at any time during the term if the other party breaches
or is in default of the performance of its obligations hereunder,
and such breach or default continues for thirty (30) consecutive
days after written notice thereof is mailed to the party
breaching or in default, such termination to be effective on said
thirtieth (30th) day. In the event any of the Kmart stores
covered by this Agreement close, Cardivan's gaming operations as
to such store only shall be suspended during such closing, if
temporary and, if permanent, Cardivan's gaming operations as to
such store only shall terminate effective as of the date of the
store closing. Termination shall not affect rights or
obligations accrued hereunder prior to the effective date of
termination. In addition, in the event that (i) Kmart should
effect a material reduction in the hours of operation of the
locations, from the hours of operation in effect on the date of
this Agreement, or (ii) there should be a change in the laws or
regulations applicable to the operation of gaming devices in
retail facilities which has the effect of materially reducing the
revenues received by Cardivan from its operation of the Devices
hereunder, the parties shall negotiate in good faith to arrive at
an equitable adjustment to the terms of the Agreement.
20.Both of the parties hereto agree that they will be bound by
and comply with any rule, regulation or statute of the State of
Nevada relating to Devices herein described; together with city
and county ordinance pertaining to Devices.
21.Notwithstanding the provisions of paragraph 19 above, this
Agreement shall terminate on the effective date of any law,
ordinance, regulations or final judicial decision which, directly
or in effect, renders operations hereunder unlawful, or requires
Kmart to meet the licensing of the Nevada Gaming Commission.
Should a new tax or a current tax increase be imposed on the
gaming operations (other than increases in rate of income, sales
or excise taxes which are of general application to persons in
addition to those dealing with Devices) during the term of this
Agreement that has the effect of materially reducing the
operating income earned by Cardivan from its operation of Devices
at Kmart stores, Kmart and Cardivan agree to negotiate in good
faith to arrive at an equitable adjustment to the terms of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of this 2nd day of September, 1997.
CARDIVAN COMPANY KMART CORPORATION
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxx Xxxxxx
_________________________ _____________________
Its: Xxxxxx Xxxxxxx, President Its: Xxxx Xxxxxx
_________________________ _____________________
Senior Vice President
A:\XHIBIT10.15.wpd
August 26, 1997
EXHIBIT A
Min. # of Hours of
Store # Location Devices Operation
________________________________________________________________________
Super Kmart
4933 0000 Xxxxxx Xxxxx, Xxxx, Xx 00000 15 24 hours
4943 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxx, XX 00000 15 24 hours
Kmart
3095 0000 Xxx Xxxxx Xxxx. X., X. Xxx Xxxxx, XX 00000 15 8a-10p
3110 0000 Xxxxxxx Xxxx, Xxxx, XX 00000 16 8a-10p
3592 0000 X. Xxxxxxx Xxxx, Xxx Xxxxx, XX 00000 16 8a-10p
3680 0000 X. Xxxxxx Xxxx, Xxx Xxxxx, XX 00000 15 8a-10p
3719 0000 X. Xxxxxx Xxxxx, Xxx Xxxxx, XX 00000 16 8a-10p
3857 000 X. Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 15 8a-10p
3894 0000 Xxxxxxxx Xxxx Xxx., Xxxx, XX 00000 15(A) 8a-10p M-Sa
8a-9p Sun.
4151 0000 Xxxxx Xxxx., Xxxxxx, XX 00000 16 8a-10p
4369 0000 X. Xxxxxx Xxxxxx, Xxx Xxxxx, XX 00000 15 8a-10p
7586 0000 X. Xxxxxxx Xxxx., Xxx Xxxxx, XX 00000 15 8a-10p
(A) Subject to Cardivan obtaining all the necessary regulatory approvals
and licenses
August 15, 1997
EXHIBIT B
For the Period RCT
Store Monthly Fee per Device # of Devices Total Due Per Month
_____ ______________________ ____________ ___________________
Super Kmart
___________
Store #
_______
4933 RCT 15 RCT
0000 XXX 00 XXX
Xxxxx Store #
_____________
3095 RCT 15 RCT
3110 RCT 16 RCT
3592 RCT 16 RCT
3680 RCT 15 RCT
3719 RCT 16 RCT
3857 RCT 15 RCT
3894 RCT 15 RCT
4151 RCT 16 RCT
4369 RCT 15 RCT
7586 RCT 15 RCT
Total All: RCT
(A) Subject to Cardivan obtaining all the necessary regulatory approvals
and licenses.
EXHIBIT B
For the Period RCT
Store Monthly Fee per Device # of Devices Total Due Per Month
_____ ______________________ ____________ ___________________
Super Kmart
___________
Store #
_______
4933 RCT 15 RCT
0000 XXX 00 XXX
Xxxxx Store #
_____________
3095 RCT 15 RCT
3110 RCT 16 RCT
3592 RCT 16 RCT
3680 RCT 15 RCT
3719 RCT 16 RCT
3857 RCT 15 RCT
3894 RCT 15 RCT
4151 RCT 16 RCT
4369 RCT 15 RCT
7586 RCT 15 RCT
Total All: RCT
(A) Subject to Cardivan obtaining all the necessary regulatory approvals
and licenses.
EXHIBIT B
For the Period RCT
Store Monthly Fee per Device # of Devices Total Due Per Month
_____ ______________________ ____________ ___________________
Super Kmart
___________
Store #
_______
4933 RCT 15 RCT
0000 XXX 00 XXX
Xxxxx Store #
_____________
3095 RCT 15 RCT
3110 RCT 16 RCT
3592 RCT 16 RCT
3680 RCT 15 RCT
3719 RCT 16 RCT
3857 RCT 15 RCT
3894 RCT 15 RCT
4151 RCT 16 RCT
4369 RCT 15 RCT
7586 RCT 15 RCT
Total All: RCT
(A) Subject to Cardivan obtaining all the necessary regulatory approvals
and licenses.
EXHIBIT B
For the Period RCT
Store Monthly Fee per Device # of Devices Total Due Per Month
_____ ______________________ ____________ ___________________
Super Kmart
___________
Store #
_______
4933 RCT 15 RCT
0000 XXX 00 XXX
Xxxxx Store #
_____________
3095 RCT 15 RCT
3110 RCT 16 RCT
3592 RCT 16 RCT
3680 RCT 15 RCT
3719 RCT 16 RCT
3857 RCT 15 RCT
3894 RCT 15 RCT
4151 RCT 16 RCT
4369 RCT 15 RCT
7586 RCT 15 RCT
Total All: RCT
(A) Subject to Cardivan obtaining all the necessary regulatory approvals
and licenses.
