Location: Las Vegas, Nevada
Entity No. 19454
Unit No.: 1140
XXXXXX XXXXXXX INTERNATIONAL, INC.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement"), dated May 9, 1996, is between
XXXXXX XXXXXXX INTERNATIONAL, INC. a Delaware corporation ("we", "our" or
"us"), and LEROY'S HOTEL CORPORATION, A SUBSIDIARY OF AMERICAN WAGERING,
INC., a Nevada corporation ("you"). The definitions of capitalized terms are
found in Appendix A. In consideration of the following mutual promises, the
parties agree as follows:
This transaction involves the transfer of an existing Chain Facility at the
Location first granted to Bruyea-Pond Las Vegas, a general partnership
("Prior Licensee") in a License Agreement with us dated October 8, 1990 (the
"Prior Agreement"). You assume and obligate yourself to peform any and all
of the obligations (financial and otherwise) of the Prior Licensee under the
Prior Agreement that is not paid or performed as of the date of this
Agreement, including without limitation, the obligation to pay any unpaid
Royalties, Marketing Contributions, Room Sales Charges or other amounts due
us and to correct any uncured defaults other than as expressly superseded by
this Agreement.
1. License. We have the exclusive right to license and franchise to you the
distinctive "Xxxxxx Xxxxxxx" System for providing transient guest lodging
services. We grant to you and you accept the License, effective and
commencing on the Opening Date and ending on the earliest to occur of the
Term's expiration, a Transfer or a Termination. You will call the Facility a
"Xxxxxx Xxxxxxx [Inn][Hotel][Plaza Hotel]." You may adopt additional or
secondary designations for the Facility with our prior written consent,
which we may withhold, condition, or withdraw on written notice in our sole
discretion.
2. International Operators Council, Inc. You are automatically a member of
the INOC and are entitled to vote at its meetings on the basis of one Chain
Facility, one vote. The purpose of the INOC will be to consider, discuss,
and make recommendations on common issues relating to the operation of Chain
Facilities. We will seek the advice and counsel of the INOC Board of
Directors and its various committees. We will assist the INOC to function in
a manner consistent with the best interests of the Chain, and to adopt its
governing rules to be consistent with the best interests of the Chain.
3. Your Improvement and Operating Obligations. Your obligations to improve,
operate and maintain the Facility are:
3.1 Improvements. You must select and acquire the Location and acquire,
equip and supply the Facility in accordance with System Standards for
entering conversion facilities. You must
begin improvement of the Facility no later than thirty (30) days after the
Effective Date. The Facility must score 400 points (or equivalent) within
ninety (90) days after the Effective Date and 425 points (or equivalent)
within nine months after the Effective Date. All improvements will comply
with System Standards, any Approved Plans, Schedule B and any Punch List
attached to this Agreement. Your general contractor or you must carry the
insurance required under this Agreement during renovation. If you do not
commence or complete the improvement of the Facility by the dates specified
in this Section 3.1, or the Facility does not meet the post-transfer
quality assurance inspection standard, or complete the post-transfer
improvements specified in the Punch List after the Effective Date, then we
may, in our sole discretion; terminate this Agreement by giving written
notice to you. Time is of the essence for the Improvement Obligation. We
may, however, in our sole discretion, grant one or more extensions of time
to perform any phase of the Improvement Obligation. The grant of an
extension will not waive any other default existing at the time the
extension is granted.
3.2 Improvement Plans. You will create plans and specifications for the work
described in Section 3.1 (based upon the System Standards and this
Agreement) if we so request and submit them for our approval before starting
improvement of the Location. We will not unreasonably withhold or delay our
approval, which is intended only to test compliance with System Standards,
and not to detect errors or omissions in the work of your architects,
engineers, contractors or the like. Our review does not cover technical,
architectural or engineering factors, or compliance with federal, state or
local laws, regulations or code requirements. We will not be liable to your
lenders, contractors, employees, guests, others or you on account of our
review or approval of your plans, drawings or specifications, or our
inspection of the Facility before, during or after renovation or
construction. Any material variation from the Approved Plans requires our
prior written approval. You will promptly provide us with copies of permits,
job progress reports, and other information as we may reasonably request. We
may inspect the work while in progress without prior notice.
3.3 Opening. You may continue to identify the Facility as part of the System
prior to completing the Improvement Obligation.
3.4 Operation. You will operate and maintain the Facility continuously after
the Opening Date on a year-round basis as required by System Standards and
offer transient guest lodging and other related services of the Facility
(including those specified on Schedule B) to the public in compliance with
the law and System Standards. You will keep the Facility in a clean, neat,
and sanitary condition. You will clean, repair, replace, renovate,
refurbish, paint, and redecorate the Facility and its FF&E as and when
needed to comply with System Standards. The Facility will be managed by
either a management company or an individual manager with significant
training and experience in general management of similar lodging facilities.
The Facility will accept payment from guests by all credit and debit cards
we designate in the System Standards Manual. You may add to or discontinue
the amenities, services and facilities described in Schedule B, or lease or
subcontract any service or portion of the Facility, only with our prior
written consent which we will not unreasonably withhold or delay. Your front
desk operation,
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telephone system, parking lot, swimming pool and other guest service
facilities may not be shared with or used by guests of another lodging or
housing facility.
3.5 Training. You (or a person with executive authority if you are an
entity) or the Facility's general manager will attend the training programs
described in Section 4.1 we designate as mandatory for licensees or general
managers, respectively. You will train or cause the training of all Facility
personnel as and when required by System Standards and this Agreement. You
will pay for all travel, lodging, meals and compensation expenses of the
people you send for training programs, the cost of training materials and
other reasonable charges we may impose for training under Section 4.1, and
all travel, lodging, meal and facility and equipment rental expenses of our
representatives if training is provided at the Facility.
3.6 Marketing.
3.6.1 You will participate in System marketing programs, including the
Directory and the Reservation System. You will obtain and maintain the
computer and communications service and equipment we specify to participate
in the Reservation System. You will comply with our rules and standards for
participation, and will honor reservations and commitments to guests and
travel industry participants. You may implement, at your option and expense,
your own local advertising. Your advertising materials must use the Marks
correctly, and must comply with System Standards or be approved in writing
by us prior to publication. You will stop using any non-conforming,
out-dated or misleading advertising materials if we so request.
3.6.2 You may participate in any regional marketing training or management
alliance or cooperative of Chain licensees formed to serve the Chain
Facilities in your area. We may assist the cooperative collect
contributions. You may be excluded from cooperative programs and benefits if
you don't participate in all cooperative programs according to their terms,
including making payments and contributions when due.
3.6.3 You will participate in marketing programs approved by the INOC Board
of Directors. These may require you to contribute available guest room
nights to an exchange program for which the Chain receives media placements
or other promotional consideration.
3.7 Governmental Matters. You will obtain as and when needed all
governmental permits, licenses and consents required by law to construct,
acquire, renovate, operate and maintain the Facility and to offer all
services you advertise or promote. You will pay when due or properly contest
all federal, state and local payroll, withholding, unemployment, beverage,
permit, license, property, ad valorem and other taxes, assessments, fees,
charges, penalties and interest, and will file when due all governmental
returns, notices and other filings.
3.8 Inspections and Audits. You will permit our representatives to perform
quality assurance inspections of the Facility and audit your financial and
operating books and records (including tax returns) relating to the Facility
and any related business, with or without prior notice of the inspection or
audit. The inspections and audits will commence during normal business
hours,
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although we may observe Facility operation and accounting activity at any
time. You, the Facility staff and your other agents and employees will
cooperate with our inspectors and auditors in the performance of their
duties. You will pay us any underpayment of, and we will pay you or credit
your Recurring Fee account for any overpayment of, Recurring Fees discovered
by an audit. You will pay the reasonable travel, lodging and meal expenses
of our reinspection or audit and any reinspection fee we may impose if the
Facility does not pass an inspection, you refuse to cooperate with our
auditors or inspectors, or the audit reveals that you paid us less than 97%
of the correct amount of Recurring Fees. We may publish or disclose the
results of quality assurance inspections.
3.9 Reports and Accounting. You will prepare and submit timely monthly
reports containing the information we require about the Facility's
performance during the preceding month. You will prepare and submit other
reports and information about the Facility as we may reasonably request from
time to time or in the System Standards Manual. You will maintain accounting
books and records in accordance with generally accepted accounting
principles and the American Hotel & Motel Association Uniform System of
Accounts for Hotels, as amended, subject to this Agreement and other
reasonable accounting standards we may specify from time to time. You will
prepare and submit to us if we so request your annual and semi-annual
financial statements. We do not require that your financial statements be
independently audited, but you will send us a copy of your audited
statements if you have them audited and we ask for them.
3.10 Insurance. You will obtain and maintain during the Term of this
Agreement the insurance coverage required under the System Standards Manual
from insurers meeting the standards established in the Manual. Unless we
instruct you otherwise, your liability insurance policies will name Xxxxxx
Xxxxxxx International, Inc. and HFS Incorporated as additional insureds.
3.11 Conferences. You or your representative and your general manager will
attend each annual Chain conference and pay the Conference Fee we set for
the Chain licensees, if and when we or the INOC Board of Directors hold an
annual Chain conference. Mandatory recurrent training for licensees and
general managers described in Section 4.1.3 may be held at a conference. The
Fee we set will be the same for all Chain Facilities that we license in the
United States. You will receive reasonable notice of a Chain conference. You
will pay one Conference Fee for all of the Chain Facilities you own.
3.12 Purchasing. You will purchase or obtain certain items we designate as
proprietary or that bear Marks from suppliers we approve. You may purchase
any other items for the Facility from any competent source you select, so
long as the items meet or exceed System Standards.
3.13 Good Will. You will use reasonable efforts to protect, maintain and
promote the name "Xxxxxx Xxxxxxx" and its distinguishing characteristics,
and the other Marks. You will not permit or allow your officers, directors,
principals, employees, representatives, or guests of the Facility to engage
in, conduct which is unlawful or damaging to the good will or public image
of the Chain or System. You will participate in Chain-wide guest service and
satisfaction guaranty programs we require in good faith for all Chain
Facilities. You will follow System
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Standards for identification of the Facility and for you to avoid confusion
on the part of guests, creditors, lenders, investors and the public as to
your ownership and operation of the Facility, and the identity of your
owners.
3.14 Facility Modifications. You may materially modify, diminish or expand
the Facility (or change its interior design, layout, FF&E, or facilities)
only after you receive our prior written consent, which we will not
unreasonably withhold or delay. You will pay our Rooms Addition Fee then in
effect for each guest room you add to the Facility. If we so request, you
will obtain our prior written approval of the plans and specifications for
any material modification, which we will not unreasonably withhold or delay.
You will not open to the public any material modification until we inspect
it for compliance with the Approved Plans and System Standards.
3.15 Courtesy Lodging. You will provide lodging at the "Employee Rate"
established in the System Standards Manual from time to time (but only to
the extent that adequate room vacancies exist) to our representatives
traveling on business, but not more than three standard guest rooms at the
same time.
3.16 Minor Renovations. Beginning three years after the Opening Date, we may
issue a "Minor Renovation Notice" to you that will specify reasonable
Facility upgrading and renovation requirements (a "Minor Renovation") to be
commenced no sooner than 60 days after the notice is issued, having an
aggregate cost for labor, FF&E and materials estimated by us to be not more
than the Minor Renovation Ceiling Amount. You will perform the Minor
Renovations as and when the Minor Renovation Notice requires. We will not
issue a Minor Renovation Notice within three years after the date of a prior
Minor Renovation Notice, or if the three most recent quality assurance
inspection scores of the Facility averaged at least 425 points or equivalent
and the most recent quality assurance inspection score for the Facility was
at least 400 points or equivalent when the Facility is otherwise eligible
for a Minor Renovation.
4. Our Operating and Service Obligations. We will provide you with the
following services and assistance:
4.1 Training. We will offer hospitality management training, property
opening training, recurrent training and supplemental training.
4.1.1 Management Training. Between 60 days before and six months after the
projected Opening Date, we will offer at a location in the United States we
designate, and the Facility general manager must complete a training program
to our satisfaction. The training program will not exceed two weeks in
duration and will cover such topics as System Standards, services available
from us, and operating a Chain Facility. We may charge you a reasonable fee
for the ancillary services of lodging, materials, meals, and local
transportation for each manager trainee. Any replacement general manager of
the Facility must complete the training program within the time specified in
the System Standards Manual. No tuition will be charged for your first
participation in this training but you must pay for your representative's
travel, compensation and
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benefits, and for any ancillary services not provided by us. We may charge
you reasonable tuition and fees for ancillary services for training for
replacement general managers.
4.1.2 Property Opening Training. We will provide at the Facility or another
agreed location a "Property Training Program" (at our discretion as to
length and scheduling) to assist you in opening the Facility. There is no
charge for the Property Training Program other than for the reasonable
expenses for travel, room, board and other out-of-pocket costs of our
representatives.
4.1.3 Recurrent Training. We may provide additional training for you and the
Facility's general manager if we determine that additional mandatory
training for licensees and general managers is necessary in the future.
Training will be held in our U.S. training center or other locations. You
will pay for your representative's travel, lodging, meals, incidental
expenses, compensation and benefits for this training directly or through an
ancillary services fee to us. This training may be held in conjunction with
a Chain conference.
4.1.4 Supplemental Training. We may offer optional training programs without
charge or for tuition. We may offer or sell to you video tapes, computer
discs or other on-site training aids and materials, or require you to buy
them at reasonable prices.
4.1.5 We may charge you a reasonable cancellation fee if you cancel your
training program commitments or reservations within 30 days (or such shorter
period as we may specify) before the start of any training program at which
you or your representative has a reservation. We may charge you tuition for
your representatives to attend mandatory sessions other than those people we
require to attend the training and fees for instructional materials.
4.2 Reservation System. We will operate and maintain (directly or by
subcontracting with an affiliate or one or more third parties) a
computerized Reservation System or such technological substitute(s) as we
determine, in our discretion. We will use the Room Sales Charge for the
acquisition, development, support, equipping, maintenance, improvement and
operation of the Reservation System. We will provide software maintenance
for the software we license to you to connect to the Reservation System if
your Recurring Fee payments are up to date. The Facility will participate in
the Reservation System, commencing with the Opening Date for the balance of
the Term. We have the right to provide reservation services to lodging
facilities other than Chain Facilities or to other parties. We will not
offer callers to our general consumer toll free reservation telephone number
in the United States the opportunity to make reservations for other lodging
chains. We may use Room Sales Charges we collect to reimburse our reasonable
direct and indirect costs, overhead or other expenses of operating the
Reservation System.
4.3 Marketing.
4.3.1 We will promote public awareness and usage of Chain Facilities by
implementing advertising, promotion, publicity, market research and other
marketing programs, training
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programs and related activities, and the production and distribution of
Chain publications and directories of hotels. We will determine in our
discretion, after consultation with and the approval of the INOC Board of
Directors: (i) The nature and type of media placement; (ii) The allocation
(if any) among international, national, regional and local markets; and
(iii) The nature and type of advertising copy, other materials and programs.
We or an affiliate may be reimbursed for the reasonable direct and indirect
costs, overhead or other expenses of providing marketing services. We are
not obligated to supplement or advance funds available from System licensees
to pay for marketing activities. We do not promise that the Facility or you
will benefit directly or proportionately from marketing activities.
4.3.2 We may, at our discretion, implement special international, national,
regional or local promotional programs (which may or may not include the
Facility) and may make available to you (to use at your option) media
advertising copy and other marketing materials for prices which reasonably
cover the materials' direct and indirect costs. We may require your
participation in marketing programs approved by the INOC Board of Directors,
and administer those programs on behalf of the INOC.
4.3.3 We will publish the Chain Directory. We will include the Facility in
the Chain Directory after it opens if you submit the information we request
on time, and you are not in default under this Agreement at the time we must
arrange for publication. We will supply Directories to you for display at
locations specified in the System Standards Manual or policy statements. We
may assess you a reasonable charge for the direct and indirect expenses
(including overhead) of producing and delivering the Directories.
4.3.4 We may use Marketing Contributions we collect to reimburse our
reasonable direct and indirect costs, overhead and other expenses of
providing marketing, training and related services.
4.4 Purchasing. We may offer optional assistance to you with purchasing
items used at or in the Facility. Our affiliates may offer this service on
our behalf. We may restrict the vendors authorized to sell proprietary or
Xxxx-bearing items in order to control quality, provide for consistent
service or obtain volume discounts. We will maintain and provide to you
lists of suppliers approved to xxxxxxx Xxxx-bearing items, or whose products
conform to System Standards.
4.5 The System. We will control and establish requirements for all aspects
of the System. We may, in our discretion, change, delete from or add to the
System, including any of the Marks or System Standards, in response to
changing market conditions. We may, in our discretion, permit deviations
from System Standards, based on local conditions and our assessment of the
circumstances. We may change the designation standards for the Chain and
then require that you change the designation of the Facility and related
presentation of that designation wherever it appears.
4.6 Consultations and Standards Compliance. We will assist you to understand
your obligations under System Standards by telephone, mail, during quality
assurance inspections,
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through the System Standards Manual, at training sessions and during
conferences and meetings we conduct. We will provide telephone and mail
consultation on Facility operation and marketing through our
representatives.
4.7 System Standards Manual and Other Publications. We will specify System
Standards in the System Standards Manual, policy statements or other
publications. We will lend you one copy of the System Standards Manual
promptly after we sign this Agreement. We will send you any System Standards
Manual revisions and/or supplements as and when issued. We will send you all
other publications for Chain licensees and all separate policy statements in
effect from time to time.
4.8 Inspections and Audits. We have the unlimited right to conduct
unannounced quality assurance inspections of the Facility and its
operations, records and Xxxx usage to test the Facility's compliance with
System Standards and this Agreement, and the audits described in Section
3.8. We have the unlimited right to reinspect if the Facility does not
achieve the score required on an inspection. We may impose a reinspection
fee and will charge you for our reasonable costs of travel, lodging and
meals for any reinspection, or for an audit if you pay less than 97% of the
correct amount of Recurring Fees. Our inspections are solely for the
purposes of checking compliance with System Standards.
5. Term. The Term begins on the Effective Date and expires on the day prior
to the fifteenth anniversary of the Opening Date. Some of your duties and
obligations will survive termination or expiration of this Agreement. You
will execute and deliver to us with this Agreement a notarized Declaration
of License Agreement in recordable form. We will countersign and return one
copy of the Declaration to you. We may, at our option, record the
Declaration in the real property records of the county where the Facility is
located. The Declaration will be released at your request and expense when
this Agreement terminates or expires and you perform your post-termination
obligations. NEITHER PARTY HAS RENEWAL RIGHTS OR OPTIONS.
6. Application and Initial Fees. We have received from you a non-refundable
Application Fee of $1,000.00. You will pay us a non-refundable Initial Fee
in the amount of $34,000.00, when you sign this Agreement, which is fully
earned when we sign this Agreement.
7. Recurring Fees, Taxes and Interest.
7.1 You will pay us certain "Recurring Fees" in U.S. dollars (or such other
currency as we may direct if the Facility is outside the United States) ten
days after the month in which they accrue, without billing or demand.
Recurring Fees include the following:
7.1.1 A "Royalty" equal to four percent (4.0%) of Gross Room Revenues of the
Facility accruing during the calendar month, accrues from the earlier of the
Opening Date or the date you identify the Facility as a Chain Facility or
operate it under a Xxxx until the end of the Term.
7.1.2 A "Marketing Contribution" as set forth in Schedule C for advertising,
promotion, training and other related services and programs, accrues from
the Opening Date until the end of the Term. We may increase or adjust the
Marketing Contribution from time to time if either approved by the Board of
Directors of the INOC or a successor sanctioned as such by us or
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approved by a majority vote (which shall be counted on the basis of one
Chain Facility, one vote) of INOC members in good standing, present and
voting at a general membership meeting or at a special meeting called for
the purpose of considering the change in the Contribution by the INOC Board
of Directors and upon at least 15 days' notice from us.
7.1.3 A "Room Sales Charge" as set forth in Schedule C as well as such other
Reservation System Charges as we establish from time to time, accrues from
the Opening Date until the end of the Term. We may increase or adjust such
Room Sales Charge on a Chain-wide basis, upon 60 days written notice to
Licensees, to cover costs (including reasonable direct or indirect overhead
costs) related to such services and programs or the cost of additional
services or programs. You will also pay or reimburse us for travel agent and
general sales agent commissions paid for certain reservations at the
Facility and a "GDS Fee" levied to pay for reservations for the Facility
originated or processed through the Global Distribution System and other
reservation systems and networks. We may charge a reasonable service fee for
this service. We may charge Facilities using the Reservation System outside
the United States for reservation service using a different formula.
7.2 You will pay to us "Taxes" equal to any federal, state or local sales,
gross receipts, use, value added, excise or similar taxes assessed against
us on the Recurring Fees by the jurisdictions where the Facility is located,
but not including any income tax, franchise or other tax for our privilege
of doing business in your State. You will pay Taxes to us when due.
7.3 "Interest" is payable when you receive our invoice on any past due
amount payable to us under this Agreement at the rate of 1.5% per month or
the maximum rate permitted by applicable law, whichever is less, accruing
from the due date until the amount is paid.
7.4 If a transfer occurs, your transferee or you will pay us our then
current Application Fee and a "Relicense Fee" equal to the Initial Fee we
would then charge a new licensee for the Facility.
8. Indemnifications.
8.1 Independent of your obligation to procure and maintain insurance, you
will indemnify, defend and hold the Indemnitees harmless, to the fullest
extent permitted by law, from and against all Losses and Expenses, incurred
by any Indemnitee for any investigation, claim, action, suit, demand,
administrative or alternative dispute resolution proceeding, relating to or
arising out of any transaction, occurrence or service at, or involving the
operation of the Facility, any breach or violation of any contract or any
law, regulation or ruling by, or any act, error or omission (active or
passive) of, you, any party associated or affiliated with you or any of the
owners, officers, directors, employees, agents or contractors of you or your
affiliates, including when the active or passive negligence of any
Indemnitee is alleged or proven. You have no obligation to indemnify an
Indemnitee for damages to compensate for property damage or personal injury
if a court of competent jurisdiction makes a final decision not subject to
further appeal that the Indemnitee engaged in willful misconduct or
intentionally caused such property damage or bodily injury. This exclusion
from the obligation to indemnify shall not, however, apply if the property
damage or bodily injury resulted from the use of reasonable force by the
Indemnitee to protect persons or property.
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8.2 You will respond promptly to any matter described in the preceding
paragraph, and defend the Indemnitee. You will reimburse the Indemnitee for
all costs of defending the matter, including attorneys' fees, incurred by
the Indemnitee if your insurer or you do not assume defense of the
Indemnitee promptly when requested. We must approve any resolution or course
of action in a matter that could directly or indirectly have any adverse
effect on us or the Chain, or could serve as a precedent for other matters.
8.3 We will indemnify, defend and hold you harmless, to the fullest extent
permitted by law, from and against all Losses and Expenses incurred by you
in any action or claim arising from your proper use of the System alleging
that your use of the System and any property we license to you is an
infringement of a third party's rights to any trade secret, patent,
copyright, trademark, service xxxx or trade name. You will promptly notify
us in writing when you become aware of any alleged infringement or an action
is filed against you. You will cooperate with our defense and resolution of
the claim. We may resolve the matter by obtaining a license of the property
for you at our expense, or by requiring that you discontinue using the
infringing property or modify your use to avoid infringing the rights of
others.
9. Your Assignments, Transfers and Conveyances.
9.1 Transfer of the Facility. This Agreement is personal to you (and your
owners if you are an entity). We are relying on your experience, skill and
financial resources (and that of your owners and the guarantors, if any) to
sign this Agreement with you. You may finance the Facility and xxxxx x xxxx,
security interest or encumbrance on it without notice to us or our consent.
If a Transfer is to occur, the transferee or you must comply with Section
9.3. Your License terminates when the Transfer occurs. If the transferee
does not sign a replacement license agreement with us before you give the
transferee ownership or possession of the Facility, then the License
terminates when you transfer ownership or possession of the Facility. The
transferee may not operate the Facility under the System, and you are
responsible for performing the post-termination obligations in Section 13.
You and your owners may, only with our prior written consent and after you
comply with Sections 9.3 and 9.6, assign, pledge, transfer, delegate or
grant a security interest in all or any of your rights, benefits and
obligations under this Agreement, as security or otherwise. Transactions
involving Equity Interests that are not Equity Transfers do not require our
consent and are not Transfers.
9.2 Public Offerings and Registered Securities. You may engage the first
registered public offering of your Equity Interests only after you pay us a
public offering fee equal to $15,000. Your Equity Interests (or those of a
person, parent, subsidiary, sibling or affiliate entity, directly or
indirectly effectively controlling you), are freely transferable without the
application of this Section if they are, on the Effective Date, or after the
public offering fee is paid, they become, registered under the federal
Securities Act of 1933, as amended, or a class of securities registered
under the Securities Exchange Act of 1934, as amended, or listed for trading
on a national securities exchange or the automated quotation system of the
National Association of Securities Dealers, Inc. (or any successor system),
provided that any tender offer for at least a majority of your Equity
Interests will be an Equity Transfer subject to Section 9.1.
9.3 Conditions. We may, to the extent permitted by applicable law, condition
and withhold our consent to a Transfer when required under this Section 9
until the transferee and you meet certain conditions. If a Transfer is to
occur, the transferee (or you, if an Equity Transfer is
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involved) must first complete and submit our Application, qualify to be a
licensee in our sole discretion, given the circumstances of the proposed
Transfer, provide the same supporting documents as a new license applicant,
pay the Application and Relicense Fees then in effect, sign the form of
License Agreement we then offer in conversion transactions and agree to
renovate the Facility as if it were an existing facility of similar age and
condition converting to the System, as we reasonably determine. We will
provide a Punch List of improvements we will require after the transferee's
Application is submitted to us. We must also receive general releases from
you and each of your owners, and payment of all amounts then owed to us and
our affiliates by you, your owners, your affiliates, the transferee, its
owners and affiliates, under this Agreement or otherwise. Our consent to the
transaction will not be effective until these conditions are satisfied.
9.4 Permitted Transferee Transactions. You may transfer an Equity Interest
or effect an Equity Transfer to a Permitted Transferee without obtaining our
consent, renovating the Facility or paying a Relicense Fee or Application
Fee. No Transfer will be deemed to occur. You also must not be in default
and you must comply with the application and notice procedures specified in
Sections 9.3 and 9.6. Each Permitted Transferee must first agree in writing
to be bound by this Agreement, or at our option, execute the License
Agreement form then offered prospective licensees. No transfer to a
Permitted Transferee shall release a living transferor from liability under
this Agreement or any guarantor under any Guaranty of this Agreement. You
must comply with this Section if you transfer the Facility to a Permitted
Transferee. A transfer resulting from a death may occur even if you are in
default under this Agreement.
9.5 Attempted Transfers. Any transaction requiring our consent under this
Section 9 in which our consent is not first obtained shall be void, as
between you and us. You will continue to be liable for payment and
performance of your obligations under this Agreement until we terminate this
Agreement, all your financial obligations to us are paid and all System
identification is removed from the Facility.
9.6 Notice of Transfers. You will give us at least 30 days prior written
notice of any proposed Transfer or Permitted Transferee transaction. You
will notify us when you sign a contract to Transfer the Facility and 10 days
before you intend to close on the transfer of the Facility. We will respond
to all requests for our consent and notices of Permitted Transferee
transactions within a reasonable time not to exceed 30 days. You will notify
us in writing within 30 days after a change in ownership of 25% or more of
your Equity Interests that are not publicly held or that is not an Equity
Transfer, or a change in the ownership of the Facility if you are not its
owner. You will provide us with lists of the names, addresses, and ownership
percentages of your owner(s) at our request.
10. Our Assignments. We may assign, delegate or subcontract all or any part
of our rights and duties under this Agreement, including by operation of
law, without notice and without your consent. We will have no obligations to
you after you are notified that our transferee has assumed our obligations
under this Agreement except those that arose before we assign this
Agreement.
11
11. Default and Termination.
11.1 Default. In addition to the makers identified in Section 3.1, you will
be in default under this Agreement if (a) you do not pay us when a payment
is due, (b) you do not perform any of your other obligations when this
Agreement and the System Standards Manual require, or (c) if you otherwise
breach this Agreement. If your default is not cured within ten days after
you receive written notice from us that you have not filed your monthly
report, paid us any amount that is due or breached your obligations
regarding Confidential Information, or within 30 days after you receive
written notice from us of any other default (except as noted below), then we
may terminate this Agreement by written notice to you under Section 11.2. We
will not exercise our right to terminate if you have completely cured your
default, or until any waiting period required by law has elapsed. In the
case of quality assurance default, if you have acted diligently to cure the
default but cannot do so and have entered into a written improvement
agreement with us within 30 days after the failing inspection, you may cure
the default within 90 days after the failing inspection. We may terminate
the License if you do not perform that improvement agreement.
11.2 Termination. We may terminate the License, or this Agreement if the
Opening Date has not occurred, effective when we send written notice to you
or such later date as required by law or as stated in the default notice,
when (1) you do not cure a default as provided in Section 11.1 or we are
authorized to terminate under Section 3.1, (2) you discontinue operating the
Facility as a "Xxxxxx Xxxxxxx", (3) a guarantor on whom we are relying to
enter into this Agreement dies or becomes incapacitated, (4) you lose
possession or the right to possession of the Facility, (5) you (or any
guarantor) suffer the termination of another license or franchise agreement
with us or one of our affiliates, (6) you intentionally maintain false books
and records or submit a materially false report to us, (7) you (or any
guarantor) generally fail to pay debts as they come due in the ordinary
course of business, (8) you, any guarantor or any of your owners or agents
misstated to us or omitted to tell us a material fact to obtain or maintain
this Agreement with us, (9) you receive two or more notices of default from
us in any one year period (whether or not you cure the defaults), (10) a
violation of Section 9 occurs, or a Transfer occurs before the relicensing
process is completed, (11) you contest in court the ownership or right to
franchise or license all or any part of the System or the validity of any of
the Marks, (12) you, any guarantor or the Facility is subject to any
voluntary or involuntary bankruptcy, liquidation, dissolution, receivership,
assignment, reorganization, moratorium, composition or a similar action or
proceeding that is not dismissed within 60 days after its filing, or (13)
you maintain or operate the Facility in a manner that endangers the health
or safety of the Facility's guests.
11.3 Casualty and Condemnation.
11.3.1 You will notify us promptly after the Facility suffers a Casualty
that prevents you from operating in the normal course of business, with less
than 75% of guest rooms available. You will give us information on the
availability of guest rooms and the Facility's ability to honor advance
reservations. You will tell us in writing within 60 days after the Casualty
whether or not you will restore, rebuild and refurbish the Facility to
conform to System Standards and its condition prior to the Casualty. This
restoration will be completed within 180 days after the Casualty. You may
decide within the 60 days after the Casualty, and if we do not hear from
you, we will assume that you have decided, to terminate this Agreement,
effective as of the date of your notice or 60 days after the Casualty,
whichever comes first. If this Agreement so
12
terminates, you will pay all amounts accrued prior to termination and follow
the post-termination requirements in Section 13. You will not be obligated
to pay Liquidated Damages if the Facility will no longer be used as an
extended stay or transient lodging facility after the Casualty.
11.3.2 You will notify us in writing within 10 days after you receive notice
of any proposed Condemnation of the Facility, and within 10 days after
receiving notice of the Condemnation date. This Agreement will terminate on
the date the Facility or a substantial portion is conveyed to or taken over
by the condemning authority.
11.4 Our Other Remedies. We may suspend the Facility from the Reservation
System for any default or failure to pay or perform under this Agreement,
discontinue Reservation System referrals to the Facility for the duration of
such suspension, and may divert previously made reservations to other Chain
Facilities after giving notice of non-performance, non-payment or default.
We may deduct points under our quality assurance inspection program for your
failure to comply with this Agreement or System Standards. Reservation
service will be restored after you have fully cured any and all defaults and
failures to pay and perform. We may omit the Facility from the Directory if
you are in default on the date we must determine which Chain Facilities are
included in the Directory. You recognize that any use of the System not in
accord with this Agreement will cause us irreparable harm for which there is
no adequate remedy at law, entitling us to injunctive and other relief. We
may litigate to collect amounts due under this Agreement without first
issuing a default or termination notice. Our consent or approval may be
withheld if needed while you are in default under this Agreement or may be
conditioned on the cure of all your defaults.
11.5 Your Remedies. If we fail to issue our approval or consent as and when
required under this Agreement within a reasonable time of not less than 30
days after we receive all of the information we request, and you believe our
refusal to approve or consent is wrongful, you may bring a legal action
against us to compel us to issue our approval or consent to the obligation.
To the extent permitted by applicable law, this action shall be your
exclusive remedy. We shall not be responsible for direct, indirect, special,
consequential or exemplary damages, including, but not limited to, lost
profits or revenues.
12. Liquidated Damages.
12.1 Generally. If we terminate the License under Section 11.2, or you
terminate this Agreement (except under Section 11.3 or as a result of our
default which we do not cure within a reasonable time after written notice),
you will pay us within 30 days following the date of termination, as
Liquidated Damages, an amount equal to the sum of accrued Royalties,
Marketing Contributions and Room Sales Charges during the immediately
preceding 24 full calendar months (or the number of months remaining in the
unexpired Term at the date of termination, whichever is less). If the
Facility has been open for less than 24 months, then the amount shall be the
average monthly Royalties, Marketing Contributions and Room Sales Charges
since the Opening Date multiplied by 24. You will also pay any applicable
Taxes assessed on such payment. Liquidated Damages will not be less than the
product of $2,000.00 multiplied by the number of guest rooms in the
Facility. If we terminate this Agreement under Section 3 before the Opening
Date, you will pay us within 10 days after you receive our notice of
termination Liquidated Damages equal to one-half the amount payable for
termination under Section 11.2. Liquidated Damages are paid in place of our
claims for lost future Recurring Fees
13
under this Agreement. Our right to receive other amounts due under this
Agreement is not affected.
12.2 Condemnation Payments. In the event a Condemnation is to occur, you
will pay us the fees set forth in Section 7 for a period of one year after
we receive the initial notice of condemnation described in Section 11.3.2,
or until the Condemnation occurs, whichever is longer. You will pay us
Liquidated Damages equal to the average daily Recurring Fees for the one
year period preceding the date of your condemnation notice to us multiplied
by the number of days remaining in the one year notice period if the
Condemnation is completed before the one year notice period expires. This
payment will be made within 30 days after Condemnation is completed (when
you close the Facility or you deliver it to the condemning authority). If
the Condemnation is completed after the one year notice period expires you
will pay no Liquidated Damages, but the fees set forth in Section 7 must be
paid when due until Condemnation is completed.
13. Your Duties At and After Termination. When the License or this Agreement
terminates for any reason whatsoever:
13.1 System Usage Ceases. You will immediately stop using the System to
operate and identify the Facility. You will remove all signage and other
items bearing any Marks and follow the other steps detailed in the System
Standards Manual for changing the identification of the Facility. You will
promptly paint over or remove the Facility's distinctive System trade dress,
color schemes and architectural features.
13.2 Other Duties. You will pay all amounts owed to us under this Agreement
within 10 days after termination. You will owe us Recurring Fees on Gross
Room Revenues accruing while the Facility is identified as a "Xxxxxx
Xxxxxxx", including Room Sales Charges for so long as the Facility receives
service from the Reservation System. We may immediately remove the Facility
from the Reservation System and divert reservations as authorized in Section
11.4. We may also, to the extent permitted by applicable law, and without
prior notice enter the Facility and any other parcels, remove software
(including archive and back-up copies) for accessing the Reservation System,
all copies of the System Standards Manual, Confidential Information,
equipment and all other personal property of ours, and paint over or remove
and purchase for $10.00, all or part of any interior or exterior
Xxxx-bearing signage (or signage face plates), including billboards, whether
or not located at the Facility, that you have not removed or obliterated
within five days after termination. You will promptly pay or reimburse us
for our cost of removing such items, net of the $10.00 purchase price for
signage. We will exercise reasonable care in removing or painting over
signage. We will have no obligation or liability to restore the Facility to
its condition prior to removing the signage. We shall have the right, but
not the obligation, to purchase some or all of the Facility's Xxxx-bearing
FF&E and supplies at the lower of their cost or net book value, with the
right to set off their aggregate purchase price against any sums then owed
us by you.
13.3 Advance Reservations. The Facility will honor any advance reservations,
including group bookings, made for the Facility prior to termination at the
rates and on the terms established when the reservations are made and pay
when due all related travel agent commissions.
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13.4 Survival of Certain Provisions. Sections 3.8, 3.9, 3.13, 7, 8, 11.4, 12,
13, 15, 16 and 17 survive termination of the License and this Agreement, whether
termination is initiated by you or us, even if termination is wrongful.
14. Your Representations and Warranties. You expressly represent and warrant to
us as follows:
14.1 Quiet Enjoyment and Financing. You own, or will own prior to commencing
improvement, or lease, the Location and the Facility. You will be entitled to
possession of the Location and the Facility during the entire Term without
restrictions that would interfere with your performance under this Agreement,
subject to the reasonable requirements of any financing secured by the
Facility. You have, when you sign this Agreement, and will maintain during the
Term, adequate financial liquidity and financial resources to perform your
obligations under this Agreement.
14.2 This Transaction. You have received, at least 10 business days prior to
execution of this Agreement and making any payment to us, our current Uniform
Franchise Offering Circular for prospective licensees. Neither we nor any person
acting on our behalf has made any oral or written representation or promise to
you that is not written in this Agreement on which you are relying to enter into
this Agreement. You release any claim against us or our agents based on any oral
or written representation or promise not stated in this Agreement. You and the
persons signing this Agreement for you have full power and authority and have
been duly authorized, to enter into and perform or cause performance of your
obligations under this Agreement. You have obtained all necessary approvals of
your owners, Board of Directors and lenders. Your execution, delivery and
performance of this Agreement will not violate, create a default under or breach
of any charter, bylaws, agreement or other contract, license, permit,
indebtedness, certificate, order, decree or security instrument to which you or
any of your principal owners is a party or is subject or to which the Facility
is subject. Neither you nor the Facility is the subject of any current or
pending merger, sale, dissolution, receivership, bankruptcy, foreclosure,
reorganization, insolvency, or similar action or proceeding on the date you
execute this Agreement and was not within the three years preceding such date,
except as disclosed in the Application. You will submit to us the documents
about the Facility, you, your owners and your finances that we request in the
License Application (or after our review of your initial submissions) before or
within 30 days after you sign this Agreement.
14.3 No Misrepresentations or Implied Covenants. All written information you
submit to us about the Facility, you, your owners, any guarantor, or the
finances of any such person or entity, was or will be at the time delivered and
when you sign this Agreement, true, accurate and complete, and such information
contains no misrepresentation of a material fact, and does not omit any material
fact necessary to make the information disclosed not misleading under the
circumstances. There are no express or implied covenants or warranties, oral or
written, between we and you except as expressly stated in this Agreement.
15. Proprietary Rights.
15.1 Marks and System. You will not acquire any interest in or right to use
the System or Marks except under this Agreement. You will not apply for
governmental registration of the
15
Marks, or use the Marks or our corporate name in your legal name, but you may
use a Xxxx for an assumed business or trade name filing.
15.2 Inurements. All present and future distinguishing characteristics,
improvements and additions to or associated with the System by us, you or
others, and all present and future service marks, trademarks, copyrights,
service xxxx and trademark registrations used and to be used as part of the
System, and the associated good will, shall be our property and will inure to
our benefit. No good will shall attach to any secondary designator that you use.
15.3 Other Locations and Systems. We and our affiliates each reserve the right
to own, in whole or in part, and manage, operate, use, lease, finance, sublease,
franchise, license (as licensor or licensee), provide services to or joint
venture (i) distinctive separate lodging or food and beverage marks and other
intellectual property which are not part of the System, and to enter into
separate agreements with you or others (for separate charges) for use of any
such other marks or propriotary rights, (ii) other lodging, food and beverage
facilities, or businesses, under the System utilizing modified System Standards,
and (iii) a Chain Facility at or for any location other than the Location. There
are no territorial rights or agreements between the parties. You acknowledge
that we are affiliated with or in the future may become affiliated with other
lodging providers or franchise systems that operate under names or marks other
than the Marks. We and our affiliates may use or benefit from common hardware,
software, communications equipment and services and administrative systems for
reservations, franchise application procedures or committees, marketing and
advertising programs, personnel, central purchasing, approved supplier lists,
franchise sales personnel (or independent franchise sales representatives), etc.
15.4 Confidential Information. You will take all appropriate actions to preserve
the confidentiality of all Confidential Information. Access to Confidential
Information should be limited to persons who need the Confidential Information
to perform their jobs and are subject to your general policy on maintaining
confidentiality as a condition of employment or who have first signed a
confidentiality agreement. You will not permit copying of Confidential
Information (including, as to computer software, any translation, decompiling,
decoding, modification or other alteration of the source code of such software).
You will use Confidential Information only for the Facility and to perform under
this Agreement. Upon termination (or earlier, as we may request), you shall
return to us all originals and copies of the System Standards Manual, poiicy
statements and Confidential Information "fixed in any tangible medium
of expression," within the meaning of the U.S. Copyright Act, as amended. Your
obligations under this subsection commence when you sign this Agreement and
continue for trade secrets (including computer software we license to you) as
long as they remain secret and for other Confidential Information, for as long
as we continue to use the information in confidence, even if edited or revised,
plus three years. We will respond promptly and in good faith to your inquiry
about continued protection of any Confidential Information.
15.5 Litigation. You will promptly notify us of (i) any adverse or infringing
uses of the Marks (or names or symbols confusingly similar), Confidential
Information or other System intellectual property, and (ii) or any threatened or
pending litigation related to the System against (or naming as a party) you or
us of which you become aware. We alone handle disputes with third parties use of
all or any part of the System. You will cooperate with our efforts to resolve
these disputes. We need not initiate suit against imitators or infringers who do
not have a
16
material adverse impact on the Facility, or any other suit or proceeding to
enforce or protect the System in a matter we do not believe to be material.
16. Relationship of Parties.
16.1 Independence. You are an independent contractor. You are not our legal
representative or agent, and you have no power to obligate us for any purpose
whatsoever. We and you have a business relationship based entirely on and
circumscribed by this Agreement. No partnership, joint venture, agency,
fiduciary or employment relationship is intended or created by reason of this
Agreement. You will exercise full and complete control over and have full
responsibility for your contracts, daily operations, labor relations, employment
practices and policies, including, but not limited to, the recruitment,
selection, hiring, disciplining, firing, compensation, work rules and schedules
of your employees.
16.2 Joint Status. If you comprise two or more persons or entities
(notwithstanding any agreement, arrangement or understanding between or among
such persons or entities) the rights, privileges and benefits of this Agreement
may only be exercised and enjoyed jointly. The liabilities and responsibilities
under this Agreement will be the joint and several obligations of all such
persons or entities.
17. Legal Matters.
17.1 Partial Invalidity. If all or any part of a provision of this Agreement
violates the law of your state (if it applies), such provision or part will not
be given effect. If all or any part of a provision of this Agreement is declared
unenforceable, for any reason, or is not given effect by reason of the prior
sentence, the remainder of the Agreement shall not be affected. However, if in
our judgement the invalidity or ineffectiveness of such provision or part
substantially impairs the value of this Agreement to us, then we may at any time
terminate this Agreement by written notice to you without penalty or
compensation owed by either party.
17.2 Waivers, Modifications and Approvals. If we allow you to deviate from this
Agreement, we may insist on strict compliance at any time after written notice.
Our silence or inaction will not be or establish a waiver, consent, course of
dealing, implied modification or estoppel. All modifications, waivers, approvals
and consents of or under this Agreement by us must be in writing and signed by
our authorized representative to be effective.
17.3 Notices. Notices will be effective if in writing and delivered by facsimile
transmission with confirmation original sent by first class mail, postage
prepaid, by delivery service, with proof of delivery, or by first class, prepaid
certified or registered mail, return receipt requested, to the appropriate party
at its address stated below or as may be otherwise designated by notice. Notices
shall be deemed given on the date delivered or date of attempted delivery, if
refused.
17
Your name: LEROY'S HOTEL CORPORATION OF AMERICAN WAGERING, INC.:
Your address: 000 Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, Attention: Xxxxxx Xxxxxx
Your fax No: 000-000-0000
Xxxxxx Xxxxxxx International, Inc.:
Our address: 000 Xxxxxxxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxx Xxxxxx
00000-0000, Attention: Vice President-Franchise Compliance; Fax No.(201)
000-0000
17.4 Remedies. Remedies specified in this Agreement are cumulative and do not
exclude any remedies available at law or in equity. The non-prevailing party
will pay all costs and expenses, including reasonable attorneys' fees, incurred
by the prevailing party to enforce this Agreement or collect amounts owed under
this Agreement. You consent and waive your objection to the non-exclusive
personal jurisdiction of and venue in the New Jersey state courts situated in
Xxxxxx County, New Jersey and the United States District Court for the District
of New Jersey for all cases and controversies under this Agreement or between we
and you.
17.5 Miscellaneous. This Agreement will be governed by and construed under the
laws of the State of New Jersev. The New Jersey Franchise Practices Act will not
apply to any Facility located outside the State of New Jersey. This Agreement is
exclusively for the benefit of the parties. There are no third party
beneficiaries. No agreement between us and anyone else is for your benefit. The
section headings in this Agreement are for convenience of reference only. We may
unilaterally revise Schedule C under this Agreement. This Agreement, together
with the exhibits and schedules attached, is the entire agreement (superseding
all prior representations, agreements and understanding, (oral or written) of
the parties about the Facility.
17.6 Waiver of Jury Trial. The parties waive the right to a jury trial in any
action related to this Agreement or the relationship between the licensor, the
licensee, any guarantor, and their respective successors and assigns.
18. Special Stipulations. The following special stipulations apply to this
Agreement and supersede any inconsistent or conflicting provisions. These are
personal to you and are not transferable or assignable except to a Permitted
Transferee.
18.1 Your Additional Termination Right. You may terminate the License without
cause or penalty effective only on the SEVEN year anniversary of the Opening
Date provided you give us at least six (6) months prior written notice of
termination and you are not in default under this Agreement at the time notice
must be given or at the effective date of termination. You will pay no
Liquidated Damages if you comply with the preceding sentence and you perform the
post termination obligations specified in this Agreement within 10 days after
the effective date of termination. Your rights under this Section will
automatically terminate without notice if and as of the date (i) a Termination
occurs, (ii) you fail to cure ary default under this Agreement within the time
permitted, if any, in the notice of default we send you, or (iii) after the
Facility satisfies the Improvement Obligation, the Facility scores less than 425
(or its then equivalent) on a quality assurance inspection and then fails to
achieve a score of at least 425 (or its then equivalent) in a reinspection to be
performed no sooner than 30 days after the initial inspection.
18.2 Our Additional Termination Right. We may terminate the License without
cause or penalty effective only on the SEVEN year anniversary of the Opening
Date provided we give you at
18
least six (6) months prior written notice of termination. You will perform the
post termination obligations specified in this Agreement within 10 days after
the effective date of termination. You will pay no Liquidated Damages if we
terminate the License under this Section and you perform the post termination
obligations specified in this Agreement within 10 days after the effective date
of termination.
{SIGNATURE PAGE TO FOLLOW}
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
WE:
XXXXXX XXXXXXX INTERNATIONAL, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxxx Attest: /s/
-------------------------- ---------------------------
Xxxxxxx X. Xxxxxxxxxx Assistant Secretary
Vice President
Franchise Compliance
YOU, as licensee:
LEROY'S HOTEL CORPORATION, A SUBSIDIARY OF AMERICAN WAGERING, INC.
By:/s/ Xxxxxx Xxxxxx Attest: /s/
---------------------------- ---------------------------
Xxxxxx Xxxxxx
Executive Vice President
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APPENDIX A
DEFINITIONS
Agreement means this License Agreement.
Application Fee means the fee you pay when you submit your Application under
Section 6.
Approved Plans means your plans and specifications for constructing or improving
the Facility initial1y or after opening, as approved by us under Section 3.
Casualty means destruction or significant damage to the Facility by act of God
or other event beyond your reasonable anticipation and control.
Chain means the network of Chain Facilities.
Chain Facility means a lodging facility we own, lease, manage, operate or
authorize another party to operate using the System and identified by the Marks.
Condemnation means the taking of the Facility for public use by a government or
public agency legally authorized to do so, permanently or temporarily, or the
taking of such a substantial portion of the Facility that continued operation
in accordance with the System Standards, or with adequate parking facilities,
is commercially impractical, or if the Facility or a substantial portion is sold
to the condemning authority in lieu of condemnation.
Conference Fee means the fee we charge for your attendance at a conference for
Chain Facilities and their licensees when and if held.
Confidential Information means any trade secrets we own or protect and other
proprietary information not generally known to the lodging industry including
confidential portions of the System Standards Manual or information we otherwise
impart to you and your representatives in confidence. Confidential Information
includes the "Standards of Operation and Design Manual" and all other System
Standards manuals and documentation, including those on the subjects of employee
relations, finance and administration, field operation, purchasing and
marketing, the Reservation System software and applications software.
Declaration means the Declaration of License Agreement you and we sign under
Section 5.
Design Standards mean standards specified in the System Standards Manual from
time to time for design, construction, renovation, modification and improvement
of new or existing Chain Facilities, including all aspects of facility design,
number of rooms, rooms mix and configuration, construction materials,
workmanship, finishes, electrical, mechanical, structural, plumbing, HVAC,
utilities, access, life safety, parking, systems, landscaping, amenities,
interior design and decor and the like for a Chain Facility.
21
Directory means the general purpose directory we publish listing the names and
addresses of the Chain Facilities, and at our discretion, other Xxxxxx Xxxxxxx
facilities located outside the United States, Canada and Mexico.
Effective Date means the date that you first take possession of the Facility.
Equity Interests shall include, without limitation, all forms of equity
ownership of you, including voting stock interests, partnership interests,
limited liability company membership or ownership interests, joint and tenancy
interests, the proprietorship interest, trust beneficiary interests and all
options, warrants, and instruments convertible into such other equity interests.
Equity Transfer means any transaction in which your owners or you sell, assign,
transfer, convey, pledge, or suffer or permit the transfer or assignment of,
any percentage of your Equity Interests that will result in a change in control
of you to persons other than those disclosed on Schedule B, as in effect prior
to the transaction. Unless there are contractual modifications to your owners'
rights, an Equity Transfer of a corporation or limited liability company occurs
when either majority voting rights or beneficial ownership of more than 50% of
the Equity Interests changes. An Equity Transfer of a partnership occurs when a
newly admitted partner will be the managing, sole or controlling general
partner, directly or indirectly through a change in control of the Equity
Interests of an entity general partner. An Equity Transfer of a trust occurs
when either a new trustee with sole investment power is substituted for an
existing trustee, or a majority of the beneficiaries convey their beneficial
interests to persons other than the beneficiaries existing on the Effective
Date. An Equity Transfer does not occur when the Equity Interest ownership among
the owners of Equity Interests on the Effective Date changes without the
admission of new Equity Interest owners. An Equity Transfer occurs when you
merge, consolidate or issue additional Equity Interests in a transaction which
would have the effect of diluting the voting rights or beneficial ownership of
your owners' combined Equity Interests in the surviving entity to less than a
majority.
Facility means the Location, together with all improvements, buildings, common
areas, structures, appurtenances, facilities, entry/exit rights, parking,
amenities, FF&E and related rights, privileges and properties existing at the
Location on the Effective Date or afterwards.
FF&E means furniture, fixtures and equipment.
FF&E Standards means standards specified in the System Standards Manual for FF&E
and supplies to be utilized in a Chain Facility.
Food and Beverage means any restaurant, catering, bar/lounge, entertainment,
room service, retail food or beverage operation, continental breakfast, food or
beverage concessions and similar services offered at the Facility.
Gross Room Revenues means gross revenues attributable to or payable for rentals
of guest rooms at the Facility, including all credit transactions, whether or
not collected, but excluding separate charges to guests for Food and Beverage,
room service, telephone charges, key forfeitures and entertainment; vending
machine receipts; and federal, state and local sales, occupancy and use taxes.
22
Improvement Obligation means your obligation to either (i) renovate and upgrade
the Facility, or (ii) construct and complete the Facility, in accordance with
the Approved Plans and System Standards, as described in Section 3.
Indemnitees means us, our direct and indirect parent, subsidiary and sister
corporations, and the respective officers, directors, shareholders, employees,
agents and contractors, and the successors, assigns, personal representatives,
heirs and legatees of all such persons or entities.
Initial Fee means the fee you are to pay for signing this Agreement as stated in
Section 6.
INOC means the International Operators' Council, Inc., a Georgia non-profit
corporation, its successors and assigns as the official organization of Chain
licensees.
License means the non-exclusive license to operate the type of Chain Facility
described in Schedule B only at the Location, using the System and the Xxxx we
designate in Section 1.
License Year means the one-year period beginning on the Opening Date and each
subsequent anniversary of the Opening Date and ending on the day preceding the
next anniversary of the Opening Date.
Liquidated Damages means the amounts payable under Section 12, set by the
parties because actual damages will be difficult or impossible to ascertain on
the Effective Date and the amount is a reasonable pre-estimate of the damages
that will be incurred and is not a penalty.
Location means the parcel of land situated at, as more fully described in
Schedule A.
Losses and Expenses means all payments or obligations to make payments either
(i) to or for third party claimants by any and all Indemnitees, including guest
refunds, or (ii) incurred by any and all Indemnitees to investigate, respond to
or defend a matter, including without limitation investigation and trial
charges, costs and expenses, attorneys' fees, experts' fees, court costs,
settlement amounts, judgements and costs of collection.
Maintenance Standards means the standards specified frorn time to time in the
System Standards Manual for repair, refurbishment and replacement of FF&E,
finishes, decor, and other capital items and design materials in Chain
Facilities.
Marketing Contribution means the fee you pay to us under Section 7.1.2 and
Schedule C, as amended, for advertising, marketing, training and other services.
Marks means, collectively (i) the service marks associated with the System
published in the System Standards Manual from time to time including, but not
limited to, the name, design and logo for "Xxxxxx Xxxxxxx" and other marks (U.S.
Reg. Nos. 1,506,553; 714,495; 836,077; 1,506,552; 1,385,515; and 1,530,295) and
(ii) trademarks, trade names, trade dress, logos and derivations, and associated
good will and related intellectual properly interests.
Marks Standards means standards specified in the System Standards Manual for
interior and exterior Xxxx-bearing signage, advertising materials, china,
linens, utensils, glassware, uniforms, stationary, supplies, and other items,
and the use of such items at the Facility or elsewhere.
23
Minor Renovation means the repairs, refurbishing, repainting, and other
redecorating of the interior, exterior, guest rooms, public areas and grounds of
the Facility and replacements of FF&E we may require you to perform under
Section 3.16.
Minor Renovation Ceiling Amount means $3,000.00 per guest room.
Minor Renovation Notice means the written notice from us to you specifying the
Minor Renovation to be performed and the dates for commencement and completion
given under Section 3.16.
Opening Date means the date on which we authorize you to open the Facility for
business identified by the Marks and using the System.
Operations Standards means standards specified in the System Standards Manual
for cleanliness, housekeeping, general maintenance, repairs, concession types,
food and beverage service, vending machines, uniforms, staffing, employee
training, guest services, guest comfort and other aspects of lodging operations.
Permitted Transferee means (i) any entity, natural person(s) or trust receiving
from the personal representative of an owner any or all of the owner's Equity
Interests upon the death of the owner, if no consideration is paid by the
transferee or (ii) the spouse or adult issue of the transferor, if the Equity
Interest transfer is accomplished without consideration or payment, or (iii) any
natural person or trust receiving an Equity Interest if the transfer is from a
guardian or conservator appointed for an incapacitated or incompetent
transferor.
Protected Territory means a one mile radius from the property.
Punch List means the list of upgrades and improvements attached as part of
Schedule B, which you are required to complete under Section 3.
Recurring Fees means fees paid to us on a periodic basis, including without
limitation, Royalties, Marketing Contributors, Room Sales Charges, and other
reservation fees and charges as stated in Section 7.
Relicense Fee means the fee your transferee or you pay to us under Section 7
when a Transfer occurs.
Reservation System or "Central Reservation System" means the system for offering
to interested parties, booking and communicating guest room reservations for
Chain Facilities described in Section 4.2.
Rooms Addition Fee means the fee we charge you for adding guest rooms to the
Facility.
Room Sales Charge means the fees set forth in Section 7.1.3 and Schedule C, as
modified in accordance with this Agreement for reservation services and other
charges.
Royalty means the monthly fee you pay to us for use of the System under Section
7.1. "Royalties" means the aggregate of all amounts owed as a Royalty.
System means the comprehensive system for providing guest lodging facility
services under the Marks as we specify which at present includes only the
following: (a) the Marks; (b) other intellectual property, including
Confidential Information, System Standards Manual and know-
24
how (c) marketing, advertising, publicity and other promotional materials and
programs; (d) System Standards; (e) training programs and materials; (f) quality
assurance inspection and scoring programs; and (g) the Reservation System.
System Standards means the standards for the participating in the System
published in the System Standards Manual, including but not limited to Design
Standards, FF&E Standards, Marks Standards, Operations Standards, Technology
Standards and Maintenance Standards and any other standards, policies, rules and
procedures we promulgate about System operation and usage.
System Standards Manual means the Standards of Operation and Design Manual, and
any other manual we publish or distribute specifying the System Standards.
Taxes means the amounts payable under Section 7.2 of this Agreement.
Technology Standards means standards specified in the System Standards Manual
for local and long distance telephone communications services, telephone,
telecopy and other communications systems, point of sale terminals and computer
hardware and software for various applications, including, but not limited to,
front desk, rooms management, records maintenance, marketing data, accounting,
budgeting and interfaces with the Reservation System to be maintained at the
Chain Facilities.
Term means the period of time during which this Agreement shall be in effect, as
stated in Section 5.
Termination means a termination of the License under Sections 11.1 or 11.2 or
your termination of the License or this Agreement.
Transfer means (1) an Equity Transfer, (2) you assign, pledge, transfer,
delegate or grant a security interest in all or any of your rights, benefits and
obligations under this Agreement, as security or otherwise without our consent
as specified in Section 9, (3) you assign (other than as collateral secutity for
financing the Facility) your leasehold interest in (if any), lease or sublease
all or any part of the Facility to any third party, (4) you engage in the sale,
conveyance, transfer, or donation of your right, title and interest in and to
the Facility, (5) your lender or secured party forecloses on or takes possession
of your interest in the Facility, directly or indirectly, or (6) a receiver or
trustee is appointed for the Facility or your assets, including the Facility. A
Transfer does not occur when you pledge or encumber the Facility to finance its
acquisition or improvement, you refinance it, or you engage in a Permitted
Transferee transaction.
"You" and "Your" means and refers to the party named as licensee identified in
the first paragraph of this Agreement and its Permitted Transferees.
"We", "Our" and "Us" means and refers to Xxxxxx Xxxxxxx International, Inc., a
Delaware corporation, its successors and assigns.
25
Situate in the County of Xxxxx, State of Nevada, being portions of the North
One-Half (N 1/2) of Section 29, Township 21 South, Range 61 East M.D.B.&.M.,
Xxxxx County, Nevada, being more particularly described by metes and bounds as
follows, to wit:
BEGINNING at a point 185.15 feet left of and, at right angles to Highway
Engineer's Station "B" 198+47.45 P.O.T., of Interstate 15, Project I-015-1(6)28;
said point being further described as bearing North 0(degrees)06'00" West, along
the North-South Quarter Section line a distance of 2028.54 feet from the center
of Section 00, Xxxxxxxx 00 Xxxxx, Xxxxx 61 East, M.D.B.&.M.; THENCE South
89(degrees) 21'45" West, a distance of 115.85 feet to a point on the Easterly
right of way line of Industrial Road;
THENCE North 39(degrees)05'34" West, along said right of way line, a distance of
559.30 feet to a point;
THENCE North 10(degrees)41'21" East, a distance of 35.48 feet to a point on the
Southerly right of way line of Tropicana Avenue;
THENCE North 88(degrees)57'13" East, along said right of way line, parallel with
and 80.00 feet Southerly of the center line of Tropicana Avenue, a distance of
350.00 feet to a point on the Westerly right of way line of Interstate 15,
Project I-015-1(6)28;
THENCE South 18(degrees)39'03" East, along said right of way line a distance of
444.94 feet to a point;
THENCE South 0(degrees)03'04" East, along said right of way line a distance of
52.14 feet to a point;
THENCE South 89(degrees)21'45" West a distance of 30.33 feet to the POINT OF
BEGINNING.
Subject to the following described easement herein which is reserved for the use
of Xxxxx County, Nevada for a flood control channel, said easement being more
fully described by metes and bounds as follows, to wit:
BEGINNING at a point 185.15 feet left of and, at right angles to Highway
Engineer's Station "B" 198+47.45 P.O.T., of Interstate 15, Project I-015-1(6)28;
said point being further described as bearing North 0(degrees)06'00" West, along
the North-South Quarter Section line a distance of 2028.54 feet from the center
quarter section corner of Section 00, Xxxxxxxx 00 Xxxxx, Xxxxx 61 East,
M.D.B.&.M.;
THENCE South 89(degrees)21'45" West, a distance of 115.85 feet to a point on the
Easterly right of way line of Industrial Road;
THENCE North 39(degrees)05'34" West along said right of way line, a distance of
38.30 feet to a point;
THENCE South 78(degrees)31'03" East, a distance of 142.86 feet to the TRUE POINT
OF BEGINNING.
Situate in the County of Xxxxx, State of Nevada, being portions of the North
One-Half (N 1/2) of Section 29, Township 21 South, Range 61 East M.D.B.&.M.,
Xxxxx County, Nevada, being more particularly described by metes and bounds as
follows, to wit:
PARCELS EX-I-015-CL-037.296 & 037.297
-------------------------------------
BEGINNING at a point 500.62 feet left of and at right angles to Highway
Engineer's Station "B" 199+36.86 P.O.T., of Interstate 15; said point being
further described as bearing North 8(degrees)26'58" West, a distance of 2169.23
feet from the center quarter section corner of Section 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 61 East, M.D.B.&.M.;
THENCE South 39(degrees)05'34" East, along the Westerly right of way line of
Industrial Road, a distance of 154.10 feet to a point;
THENCE South 89(degrees)21'45" West, a distance of 97.03 feet to a point;
THENCE North 0(degrees)04'15" West, a distance of 120.67 feet to the POINT OF
BEGINNING.
Subject to the following described easement herein which is reserved for the use
of Xxxxx County, Nevada for a flood control channel, said easement being more
fully described by metes and bounds as follows, to wit:
BEGINNING at a point 403.17 feet left of and at right angles to Highway
Engineer's Station "B" 198+44.50 P.O.T., of Interstate 15, Project I-015-1(6)28;
said point being further described as bearing North 6(degrees)14'28" West, a
distance of 2038.17 feet from the center quarter section corner of Section 00,
Xxxxxxxx 00 Xxxxx, Xxxxx 61 East, M.D.B.&.M.;
THENCE South 89(degrees)21'45" West, a distance of 97.03 feet to a point;
THENCE North 0(degrees)04'15" West, a distance of 30.00 feet to a point;
THENCE North 89(degrees)21'45" East, a distance of 72.91 feet to a point on the
Westerly right of way line of Industrial Road;
THENCE South 39(degrees)05'34" East, along said right of way line a distance of
--.31 feet to the TRUE POINT OF BEGINNING.
SCHEDULE B
PART I: YOUR OWNERS:
Name Ownership Percentage Type of Equity Interest
---- -------------------- -----------------------
American Wagering 100% member
Incorporated
PART II: THE FACILITY:
Primary designation of Facility: Xxxxxx Xxxxxxx
Number of approved guest rooms: 150
Parking facilities (number of spaces, description): 150
Other amenities, services and facilities:
PART III: DESCRIPTION AND SCHEDULE OF RENOVATIONS TO BE
COMPLETED AS THE IMPROVEMENT OBLIGATION:
[Punch List to be sent under separate cover.]
SCHEDULE C
December 1995
A. Marketing Contribution
The Marketing Contribution is 2% of Gross Room Revenues.
We may increase or adjust such Marketing Contribution from time to time if
either approved by the Board of Directors of the INOC or its successor
sanctioned as such by us or approved by a majority vote (which shall be counted
on the basis of one Facility, one vote) of INOC members in good standing,
present and voting at a general membership meeting or at a special meeting
called for that purpose by the Board of Directors upon at least 15 days' notice
from us.
B. Room Sales Charge
The Room Sales Charge is 2.5% of Gross Room Revenues.
Notwithstanding the above, we may change the Room Sales Charge on a
Chain-wide basis, after 60 days written notice to licensees, to cover costs
(including reasonable direct or indirect overhead costs) related to such
services and programs or the cost of additional services or programs.
C. Additional Room Sales Charges
The GDS Fee described in Section 7 is $4.50 per gross reservation
communicated through the Global Distribution System. The travel agent commission
described in Section 7 is 10% of the Gross Room Revenues generated by each
reservation originated by a travel agent, plus our service fee of .75% of
commissionable revenue. The general sales agent commission is 3% of the Gross
Room Revenues generated by each reservation originated in an area served by a
general sales agent.
GUARANTY
To induce the franchisor, its successors and assigns ("You" or "Your") to
sign the License Agreement (the "Agreement") with the "Licensee" named in the
Agreement, to which this Guaranty is attached, the undersigned corporation, as
well as its affiliates, successor, assigns, subsidiaries, or related entities,
jointly and severally (hereinafter referred to as "We", "Our" or "Us"),
irrevocably and unconditionally (i) warrant to You that the Licensee's
representations and warranties in the Agreement are true and correct as stated,
and (ii) guaranty that the Licensee's obligations under the Agreement, including
any amendments, will be punctually paid and performed.
Upon default by the Licensee and notice from You, We will immediately make
each payment and perform or cause Licensee to perform, each unpaid or
unperformed obligation of Licensee under the Agreement. Without affecting Our
obligations under this Guaranty, You may without notice to Us extend, modify or
release any indebtedness or obligation of Licensee, or settle, adjust or
compromise any claims against Licensee. We waive notice of amendment of the
Agreement. We acknowledge that Section 17 of the Agreement applies to this
Guaranty.
We will be liable to pay under this Guaranty only if at the time We receive
from You any written request that the undersigned pay or perform Licensee's
obligations under the License Agreement, the tangible net worth of Licensee is
less than One Million Dollars ($1,000,000), as determined under generally
accepted accounting principles, as of or at a date within 30 days of the time of
Your request for payment or performance. We must furnish You with the balance
sheet of Licensee certified as accurate by the chief financial and executive
officers of Licensee. You may conclusively presume that Licensee's net worth is
less than One Million Dollars ($1,000,000) if a balance sheet as described above
is not provided to You within 10 days after Our receipt of Your request for
payment or performance.
IN WITNESS WHEREOF, each of Us has signed this Guaranty effective as of the
date of the Agreement.
Witnesses: Guarantors:
AMERICAN WAGERING, INC.
/s/ Xxxxxx /s/ Xxxxxx Xxxxxx (Seal)
----------------------------------- --------------------------------
By: Executive Vice President
