Termination, Settlement and
Release Agreement
This Termination,
Settlement and Release Agreement (this “Agreement”) is
entered into this 9th day of March, 2009, by and among FX Luxury,
LLC (formerly known as FX Luxury Realty LLC), a Delaware limited
liability company (“FX Luxury”), FX Real Estate and
Entertainment Inc., a Delaware corporation (“FXREE”
and, together with FX Luxury, the “FX Luxury Parties”),
Elvis Presley Enterprises, Inc., a Tennessee corporation
(“EPE”) and Muhammad Ali Enterprises LLC, a California
limited liability company (“MAE” and, together with
EPE, the “Licensor Parties”). The FX Luxury Parties,
EPE and MAE are each referred to herein as a “Party”
and, collectively, as the “Parties.”
WHEREAS, FX Luxury
and EPE are parties to a License Agreement, effective as of
June 1, 2007, as amended as effective as of November 16,
2007 (the “EPE License Agreement”), and FX Luxury and
MAE are parties to a License Agreement, effective as of
June 1, 2007, as amended effective as of November 16,
2007 (the “MAE License Agreement” and, together with
the EPE License Agreement, the “License Agreements”);
and
WHEREAS, pursuant
to (i) Section 7.08 of the EPE License Agreement, FX
Luxury was required, among other things, to pay EPE a guaranteed
minimum royalty for the calendar year ending December 31, 2008, of
$9,000,000 by January 30, 2009 (the “EPE Royalty
Payment”), and additional guaranteed minimum royalty payments
each calendar year thereafter for the term of the EPE License
Agreement and (ii) Section 6.07 of the MAE License
Agreement, FX Luxury was required, among other things, to pay MAE a
guaranteed minimum royalty for the calendar year ending
December 31, 2008, of $1,000,000 by January 30, 2009 (the
“MAE Royalty Payment”), and additional guaranteed
minimum royalty payments each calendar year thereafter for the term
of the MAE License Agreement; and
WHEREAS, FX Luxury
has not made either the EPE Royalty payment or the MAE Royalty
Payment; and
WHEREAS, pursuant
to (i) Section 23.02 of the EPE License Agreement, EPE
has the right to terminate the EPE License Agreement upon written
notice to FX Luxury if, among other things, FX Luxury shall fail to
make any payment due thereunder and if such default shall continue
for a period of thirty (30) business days after receipt of
written notice of such default by EPE and (ii) Section 21.02
of the MAE License Agreement, MAE has the right to terminate the
MAE License Agreement upon written notice to FX Luxury if, among
other things, FX Luxury shall fail to make any payment due
thereunder and if such default shall continue for a period of
thirty (30) business days after receipt of written notice of
such default by MAE; and
WHEREAS, FX Luxury
received written notice of its failure to make the EPE Royalty
Payment and the MAE Royalty Payment on January 31, 2009;
and
WHEREAS, the
Parties now desire to terminate the License Agreements and resolve
and settle all matters related to the License
Agreements;
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein and subject to the terms and conditions hereof, and for good
and adequate consideration, the sufficiency of which is hereby
acknowledged, the Parties hereto, intending legally to be bound,
agree as follows:
1.
Termination of License Agreements: The License
Agreements are each hereby terminated as of the date hereof (the
“Effective Date”), with such terminations governed by
Article 24 of the EPE License Agreement and Article 22 of the
MAE License Agreement, respectively, and such Articles are
expressly incorporated by reference herein, notwithstanding the
termination of the License Agreements.
2.
Covered Proceeds: In exchange for the termination of
the License Agreements and the other terms contained herein, the FX
Luxury Parties, jointly and severally, agree to pay to EPE and MAE
10% of any Covered Proceeds attributable to their direct or
indirect beneficial ownership of a Covered Party that flows through
to a Covered Party, without duplication, up to a cumulative maximum
of $10,000,000. “Covered Proceeds” shall be defined as
net distributable proceeds and fees generated from the Covered
Property to the extent received by a Covered Party (and permitted
to be distributed pursuant to the terms of any unaffiliated third
party loan agreement) from (i) a sale of Covered Property or a
sale by a Covered Party of any interest in a direct or indirect
subsidiary of a Covered Party or (ii) operations or capital
transactions related to a Covered Party, in each case in excess of
those expenses reasonably necessary or incurred to provide services
and/or operate or maintain the Covered Property, including
reasonable compensation for executives directly related to revenue
generating activities relating to the Covered Property and
reasonable reserves. “Covered Proceeds” shall exclude
sums used for the repayment, reimbursement or distribution of any
loans or capital contributions or the payment of principal or
interest, in each case made after the Effective Date with respect
to the Covered Property. “Covered Party” shall be FX
Luxury, FXREE, FX Luxury Las Vegas Parent, LLC, FX Luxury Las Vegas
I, LLC and FX Luxury Las Vegas II, LLC and any subsidiary of, or
successor to, the foregoing entities which have an interest in the
Covered Property and in which any of the foregoing has a direct or
indirect equity interest. The “Covered Property” shall
be all or any portion of the 17.72 acres currently owned by FX
Luxury Las Vegas I, LLC and FX Luxury Las Vegas II, LLC.
3.
Early Buyout Period : At any time during the Early
Buyout Period, each Covered Party shall have the right to buy out
EPE’s and MAE’s participation right contained in
Section 2 above (the “Early Buyout Right”). In the
event the Early Buyout Right is exercised, the FX Luxury Parties
shall pay to MAE and EPE at the time of such exercise: (a)
$3.3 million, plus interest (the “Early Termination
Minimum”), which amount shall not be paid from Covered
Proceeds, plus (b) 10% of the Covered Proceeds received through the
Early Buyout Period and not previously paid, but in no event more
than $10 million for the sum of both. The “Early Buyout
Period” shall be the period commencing on the Effective Date
and terminating at the earlier of (i) the date of satisfaction
of the Early Termination Minimum and (ii) five years and one
month from the Effective Date; provided that if any sale
transaction of the Covered Property occurs within six months of the
last day of the Early Buyout Period, then 10% of the Covered
Proceeds derived from such sale transaction shall also be paid to
EPE and MAE (but in no event
2
shall the
proceeds under (a) and (b) above, plus these proceeds,
exceed $10 million). Interest shall be computed on the Early
Termination Minimum at 7% per annum, compounded annually, only from
the third anniversary of the Effective Date until the date of
satisfaction of the Early Termination Minimum if the Early Buyout
Right is exercised.
4.
Payment Terms: All amounts paid to EPE and MAE
pursuant to this Agreement shall be paid 90% to EPE and 10% to MAE.
FX Luxury shall pay any amounts due hereunder within two business
days of the receipt of any Covered Proceeds by a Covered Party. Any
past due amount by FX Luxury pursuant to this Agreement shall bear
interest at a rate of 7% per annum, compounded annually, from the
due date until the date of payment. All payments and any applicable
interest thereon shall be made payable to EPE and MAE, either by
check or utilizing electronic bank transfer paid, on behalf of FX
Luxury, to:
in the case of
EPE:
Elvis Presley Enterprises, Inc.
P.O. Box 2082
Memphis, TN 38101-2082
in the case of
MAE:
Muhammad Ali Enterprises LLC
8105 Kephart Lane
Berrien Springs, Michigan 49103
Attention: Licensing Department
5.
Release to Licensor Parties: The FX Luxury Parties,
each hereby release the Licensor Parties, their respective
successors, assigns, officers, directors, trustees, fiduciaries,
benef
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