Baby Dolls Topless Saloons, Inc. and Burch Management Company, Inc. v. Gilbert Sotero, as the Representative of the Estate of Stephanie Sotero Hernandez, and Eduviges Chapa III as next friend of A.C.C., a minor Appeal from 101st Judicial District Court of Dallas County (dissenting opinion by whitehill)

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DISSENT and Opinion Filed August 21, 2020 S In The Court of Appeals Fifth District of Texas at Dallas No. 05-19-01443-CV BABY DOLLS TOPLESS SALOONS, INC., BURCH MANAGEMENT COMPANY, INC., BDS RESTAURANT, INC., AND TTNA, INC., Appellants V. GILBERT SOTERO, AS REPRESENTATIVE OF THE ESTATE OF STEPHANIE SOTERO HERNANDEZ, EDUVIGES CHAPA III AS NEXT FRIEND OF A.C.C., A MINOR, AND IVAN HERNANDEZ, INDIVIDUALLY AND AS REPRESENTATIVE OF THE ESTATE OF STEPHANIE SOTERO HERNANDEZ, Appellees On Appeal from the 101st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-19-00644 DISSENTING OPINION Before Justices Whitehill, Osborne, and Carlyle Dissenting Opinion by Justice Whitehill In the trial court, the Sotero parties opposed Baby Dolls’1 motions to compel arbitration for three reasons: (i) the Federal Arbitration Act does not apply here for lack of interstate commerce; (ii) the arbitration agreement’s scope does not include 1 I refer to appellants collectively as “Baby Dolls.” their claims; and (iii) the arbitration agreement is procedurally and substantively unconscionable. On appeal, they argue for affirmance because (i) there is a lack of interstate commerce; (ii) Sotero did not effectively delegate arbitrability questions to the arbitrator; and (iii) there was no “meeting of the minds” that the arbitration agreement would cover these types of claims. The last argument repackages their trial court scope argument, which is a contract construction issue for the arbitrator to decide. At no point have the Sotero parties asserted that the entire contract, and thus the arbitration clause as well, fails for lack of a meeting of the minds on the contract’s essential terms. Yet the majority opinion makes it the sole basis for affirming the trial court’s orders. Not only are the grounds that the Sotero parties urged meritless, but so is the ground that the majority opinion asserts for them. Specifically, the majority opinion affirms the denial of Baby Dolls’ motions to compel arbitration because the underlying contract—but not the arbitration clause itself—ostensibly fails for a lack of meeting of the minds on essential terms. That conclusion presents this issue: How does the Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403–04 (1967) separability doctrine apply to that contract defense where (i) the party resisting arbitration signed the contract containing the arbitration agreement and (ii) there is no suggestion that she lacked the legal or mental capacity to do so? –2– Because the record fails to show a viable defense to the arbitration agreement itself (e.g., that Sotero didn’t sign the contract, she lacked the capacity to do so, or any other defense that might vitiate the arbitration agreement apart from the rest of her contract), her successors are bound by her arbitration agreement—including her delegation to the arbitrator the authority to decide the scope issue. Secondarily, the majority opinion raises the prospect of a granted license existing apart from a co-existing agreement that granted the license. But by definition a license cannot exist without some agreement between the licensor and licensee regarding what right is being licensed and on what terms. Therefore, it is nonsensical to accept the idea that the parties could have been confused about the prospect of their license agreement’s expiring on December 31, 2017, but Sotero’s license to work on Baby Doll’s premises nevertheless continued thereafter without the license agreement remaining in effect. Although the majority opinion raises and relies on this metaphysically impossible legal premise, it fails to explain how that “license sans terms” arrangement could be. I. BACKGROUND Sotero and Baby Dolls desired a business relationship whereby she could work as a non-employee entertainer at Baby Dolls’ venue. The two parties signed an eleven page, twenty-six section (not counting the multi-paragraph preface), single spaced contract governing their business relationship. Their contract spanned a wide range of relationship particulars concerning when she would work and what their –3– financial arrangement would be, among many others. Another relationship particular was a seven paragraph dispute resolution section. That section is devoted almost entirely to the parties’ arbitration agreements. The contract begins with Sotero’s acknowledging that she (i) read and reviewed the agreement in its entirety; (ii) had an opportunity to consult with her chosen attorney; and (iii) understood the agreement’s terms and conditions and knowingly and voluntarily agreed to abide by them. The parties also acknowledged that their contract is the most accurate description of the nature of their relationship and represents their “meeting of the minds” regarding that relationship. The contract ends with an advisory that the document is a legal contract and the parties should not sign it unless they fully understand its terms and conditions. The contract further invites the parties to question the contract’s terms and negotiate changes. Finally, it suggests that the parties should review it with an attorney or other advisors before signing it. (A copy of the License and Lease Agreement is appended to this dissent.) In sum, Sotero knowingly, voluntarily, and with apparent full contracting capacity accepted Baby Dolls’ offer for a working relationship according to the words used in that document—whatever those words mean—and so agreed. Her agreement necessarily includes assent to the contract’s embedded arbitration clause—whatever its words mean. –4– Nonetheless, nullifying the parties’ arbitration agreement and preventing an arbitrator from deciding whether the arbitration agreement’s scope covers the present claims, the majority opinion concludes that the contract, and particularly its run of the mill automatic renewal clause, is so poorly written that as a matter of law the entire License and Lease Agreement never became a binding contract, thereby ostensibly vaporizing the parties’ arbitration agreement. I disagree because the majority opinion ignores controlling United States Supreme Court and Texas Supreme Court precedents that mandate a different result. Specifically, because the Sotero parties do not dispute Sotero’s signature or her capacity to contract, the arbitration agreement’s enforceability and scope are for the arbitrator to decide. Furthermore, in any event, the contract’s duration clause can reasonably be construed to be an automatic renewal clause, thereby negating the majority opinion’s rationale for concluding that the contract as a whole is terminally vague. II. ANALYSIS A. What is the correct analytical framework for deciding whether the contract is too uncertain to be enforced? 1. Introduction The majority opinion posits that certain words in the contract render the entire document too uncertain and indefinite to reflect a meeting of the minds on its essential terms as a whole and, therefore, the parties’ arbitration agreement contained in that contract is also necessarily unenforceable—even if construed as a –5– standalone agreement. But that approach ignores the separability doctrine’s requirements that (i) embedded arbitration agreements are analyzed as though they are independent contracts and (ii) defenses to the remaining contract containing them are for the arbitrator to decide. The recognized exceptions are whether the resisting party actually signed the contract at issue, her agent was authorized to sign for her, or she had the legal or mental capacity to make the contract. Were these contract signature and contracting capacity defenses involved in this case, they would be defenses to both the contract as a whole and the embedded arbitration agreement’s separate existence because both agreements are contained in the same written document. That is, those signature and capacity defenses would be double duty defenses to (i) the contract as a whole and (ii) whether the parties in fact “made” a written arbitration contract that the FAA requires for its application. See 9 U.S.C. § 2. (It should be noted that arbitration agreements are often created as independent, standalone documents.) But none of these contract making defenses are at issue here. Therefore, it is for the arbitrator to decide the issue that the majority arrogates to itself—whether there was a sufficiently definite offer and acceptance of the entire contract’s essential terms that a decision maker can determine the parties’ rights and duties and enforce their contract. Even assuming it’s proper to raise the argument sua sponte, the majority errs by failing to apply its enforceability analysis to the arbitration provision as a separate, standalone agreement. –6– 2. Does the FAA apply in this case? Yes, because the parties said so. The Sotero parties argue that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) does not apply because the Sotero–Baby Dolls relationship did not involve interstate commerce. We need not address that question because the parties agreed that the FAA applies. The FAA is substantive arbitration law that the parties were free to adopt as applicable to their arbitration agreement. See, e.g., In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding).2 3. Statutory Background Congress enacted the FAA in 1925 to reverse longstanding judicial hostility to arbitration agreements and place those agreements on “the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). The FAA thus manifests an “emphatic federal policy in favor of arbitral dispute resolution,” Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 631 (1985), and requires state or federal courts to “rigorously enforce 2 Nonetheless, the FAA extends to the outer limits of the federal Commerce Clause. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig. proceeding). Here, we would also properly conclude that the facts support applying the FAA under that standard too. –7– agreements to arbitrate,” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985). Section 2 is its “primary substantive provision.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). This section “provides that written agreements to arbitrate controversies arising out of an existing contract ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” Dean Witter Reynolds, 470 U.S. at 218 (quoting 9 U.S.C. § 2). 4. United States Supreme Court Authorities “A party seeking to compel arbitration under the FAA must establish that (1) there is a valid arbitration clause, and (2) the claims in dispute fall within that agreement’s scope.” Rubiola, 334 S.W.3d at 223 (emphasis added) (citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding)). As shown below, an FAA based arbitration motion’s success turns on the arbitration agreement’s standalone enforceability. a. Prima Paint The issue in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) was whether the court or the arbitrator resolves a claim of fraud in the inducement of the entire contract. Based on unambiguous statutory provisions, the Supreme Court held that FAA governed arbitration agreements are severable from the contracts containing them and that fraud in the inducement defenses to the –8– contract as a whole, instead of the arbitration agreement in particular, are for the arbitrator to decide: That answer is to be found in § 4 of the Act, which provides a remedy to a party seeking to compel compliance with an arbitration agreement. Under § 4, with respect to a matter within the jurisdiction of the federal courts save for the existence of an arbitration clause, the federal court is instructed to order arbitration to proceed once it is satisfied that “the making of the agreement for arbitration or the failure to comply (with the arbitration agreement) is not in issue.” Accordingly, if the claim is fraud in the inducement of the arbitration clause itself—an issue which goes to the ‘making’ of the agreement to arbitrate—the federal court may proceed to adjudicate it. But the statutory language does not permit the federal court to consider claims of fraud in the inducement of the contract generally. Section 4 does not expressly relate to situations like the present in which a stay is sought of a federal action in order that arbitration may proceed. But it is inconceivable that Congress intended the rule to differ depending upon which party to the arbitration agreement first invokes the assistance of a federal court. We hold, therefore, that in passing upon a § 3 application for a stay while the parties arbitrate, a federal court may consider only issues relating to the making and performance of the agreement to arbitrate. Id. at 403–04 (footnotes omitted) (emphasis added). In so holding, the Supreme Court established the bedrock principle that arbitration agreements are, with limited exceptions discussed later, treated separately from the contracts containing them. Stated differently, a single document that contains an embedded arbitration agreement is effectively two separate contracts: One is the arbitration agreement itself, and the other is the rest of the contract. b. Moses H. Cone Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) began as a petition in federal district court for an order compelling –9– arbitration of a dispute in a pending concurrent state court proceeding. The federal district court stayed that request pending resolution of the state court matter, and the court of appeals reversed that order. The Supreme Court addressed whether the district court’s order deferring to the parallel state action was proper under the FAA. Relying in part on Prima Paint, the Supreme Court held that FAA § 2 is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. Id. at 24. The Court further held that § 2’s effect is to create a body of federal substantive arbitrability law applicable to any arbitration agreement covered by the statute. Id. c. Southland Corp. Later, in Southland Corp. v. Keating, 465 U.S. 1 (1984), the Supreme Court addressed whether a California statute invalidating certain arbitration agreements covered by the FAA violated the federal constitution’s Supremacy Clause. Id. at 3. That case involved a franchisee–franchisor dispute. The subject statute had a provision that the California Supreme Court held barred enforcing agreements to arbitrate disputes under that statute. Relying on Prima Paint’s severability principle and Moses H. Cone, the United States Supreme Court reversed the California Supreme Court because the FAA is substantive federal law applicable in state courts and preempts inconsistent state law. Id. at 12; see also id. at 16. Stated differently, the Supreme Court rejected the view that state law can bar enforcing FAA § 2, even regarding state-law claims –10– brought in state court. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006) (applying Southland). d. Buckeye Check Cashing Next, in Buckeye Check Cashing the Supreme Court decided whether in an FAA governed case the court or an arbitrator should consider the claim that a contract containing an arbitration provision is invalid for illegality. See id. at 442. That is, who decides whether an arbitration clause is enforced where the resisting party asserts that the contract as a whole is illegal? Relying on Prima Paint and Southland, the Supreme Court for three reasons held it was for the arbitrator to resolve that claim: Prima Paint and Southland answer the question presented here by establishing three propositions. First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, the issue of the contract’s validity is considered by the arbitrator in the first instance. Third, this arbitration law applies in state as well as federal courts. . . . Applying them to this case, we conclude that because respondents challenge the Agreement, but not specifically its arbitration provisions, those provisions are enforceable apart from the remainder of the contract. The challenge should therefore be considered by an arbitrator, not a court. Id. at 445–46. Stated differently, according to the ultimate judicial authority, in FAA governed cases contract defenses aimed at defeating the underlying contract’s validity as a whole—instead of defeating the arbitration clause specifically—do not –11– prevent enforcing the embedded arbitration agreement and must be referred to the arbitrator. But the Supreme Court identified three contract making (not validity) defenses, which could negate the contract as a whole, that are for the courts to decide: The issue of the contract’s validity is different from the issue whether any agreement between the alleged obligor and obligee was ever concluded. Our opinion today addresses only the former, and does not speak to the issue decided in the cases cited by respondents (and by the Florida Supreme Court), which hold that it is for courts to decide whether the alleged obligor ever signed the contract, Chastain v. Robinson–Humphrey Co., 957 F.2d 851 (C.A.11 1992), whether the signor lacked authority to commit the alleged principal, Sandvik AB v. Advent Int’l Corp., 220 F.3d 99 (C.A.3 2000); Sphere Drake Ins. Ltd. v. All American Ins. Co., 256 F.3d 587 (C.A.7 2001), and whether the signor lacked the mental capacity to assent, Spahr v. Secco, 330 F.3d 1266 (C.A.10 2003). Id. at 444 n.1. I next turn to the Texas Supreme Court’s application of these principles. 5. Freedom of Contract To begin, as the supreme court constantly reiterates, courts “‘are not lightly to interfere with this freedom of contract’” because all people “‘of full age and competent understanding shall have the utmost liberty of contracting, and . . . their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice.’” Chalker Energy Partners III, L.L.C. v. Le Norman Operating LLC, 595 S.W.3d 668, 673 (Tex. 2020) (quoting Wood Motor Co., Inc. v. Nebel, 238 S.W.2d 181, 185 (Tex. 1951)). Arbitration agreements are contracts too, –12– and contract freedom principles apply to them as well. See RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 121 (Tex. 2018). At this dispute’s heart is Sotero’s and Baby Doll’s freedom to contractually agree that their disputes arising during their relationship, as well as questions regarding their arbitration agreement’s validity and scope, shall be resolved by binding arbitration. The majority opinion negates the parties’ freely entered into arbitration agreement not for any reason specific to that separable contract but for reasons unrelated to it. In so doing, the majority opinion ignores the separability doctrine and, like the Sotero parties themselves, fails to articulate any defense to the arbitration clause’s standalone enforceability. (The Sotero parties’ appellees’ brief omits their trial court unconscionability arguments and fails to otherwise challenge the clause’s validity. Instead, they argue only that the FAA doesn’t apply to the clause and that the clause doesn’t delegate arbitrability decisions to the arbitrator or apply to their claims.) Indeed, the Sotero parties concede that the clause would cover other disputes concerning the Sotero–Baby Dolls relationship. See Appellees’ Brief at 4. That is, the majority opinion does not identify any lack of meeting of the minds or other defense to the arbitration agreement itself as an independent contract. 6. Texas Supreme Court Authorities Like the federal courts, Texas generally follows a two-step standard regarding motions to compel arbitration: First, a party seeking to compel arbitration under the –13– FAA must establish the “existence of an arbitration agreement” subject to the FAA. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001) (orig. proceeding). Second, once the movant establishes an agreement, the court decides whether the agreement’s scope covers that dispute (unless the parties have delegated that issue to the arbitrator). Id. a. In re FirstMerit Bank and In re RLS Legal Solutions In FirstMerit, the plaintiffs sued several defendants alleging various common law and statutory claims, and certain defendants moved to compel arbitration. The physical existence of a signed arbitration addendum was undisputed, and it does not appear that the plaintiffs asserted forgery or lack of contracting capacity defenses to the contract. Rather, they opposed enforcing the arbitration addendum based on unconscionability, duress, fraudulent inducement, and revocation defenses to the contract as a whole. Relying on Prima Paint, the supreme court held that “these defenses must specifically relate to the Arbitration Addendum itself, not the contract as a whole, if they are to defeat arbitration,” but defenses pertaining to the underlying contract can be arbitrated. Id. at 756; see also In re Labatt Food Serv., L.P., 279 S.W.3d 640, 648 (Tex. 2009) (orig. proceeding) (“[A] challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”) –14– In re RLS Legal Solutions, LLC, 221 S.W.3d 629 (Tex. 2007) (per curiam) (orig. proceeding), extended FirstMerit to cases where the arbitration agreement is a clause in a larger agreement. Id. at 631. b. In re Morgan Stanley & Co., Inc. 1. Majority Opinion In In re Morgan Stanley & Co., Inc., 293 S.W.3d 182 (Tex. 2009) (orig. proceeding), the supreme court considered whether a court or an arbitrator should decide if a party to various brokerage agreements lacked the mental capacity to assent to those contracts. Setting the stage for its ensuing discussion, the court acknowledged Prima Paint’s separability doctrine and observed, “Since Prima Paint, we have dutifully followed the separability doctrine that presumptively favors arbitration.” Id. at 185. After an exhaustive analysis, the supreme court held that the resisting party’s mental capacity to sign the contracts with arbitration agreements was for the court to decide, because her mental capacity (or lack thereof) went to the existence of an agreement to arbitrate: Given the overwhelming weight of authority, it is apparent to us that the formation defenses identified in Buckeye are matters that go to the very existence of an agreement to arbitrate and, as such, are matters for the court, not the arbitrator. Id. at 189. Those Buckeye formation defenses related to the contract’s execution or the resisting party’s contracting capacity. See 546 U.S. at 444 n.1. –15– In reaching its conclusion, the supreme court extensively reviewed Prima Paint, Southland Corp., Buckeye, and numerous lower court decisions from around the country. See Morgan Stanley, 293 S.W.3d at 184–90. In particular, Morgan Stanley compared and contrasted the Fifth Circuit’s Primerica Life Insurance Co. v. Brown, 304 F.3d 469, 472 (5th Cir. 2002) decision, which held that mental capacity to contract was for the arbitrator to decide, with the Tenth Circuit’s Spahr v. Secco, 330 F.3d 1266 (10th Cir. 2003) decision, which held that issue was for the court: There is some disagreement about what Prima Paint requires in this situation. The Fifth Circuit in Primerica Life Insurance Co. v. Brown, 304 F.3d 469, 472 (5th Cir. 2002), has concluded that the arbitrator should decide a defense of mental incapacity because it is not a specific challenge to the arbitration clause but rather goes to the entire agreement. The Tenth Circuit reached the opposite result in Spahr v. Secco, 330 F.3d 1266 (10th Cir. 2003), concluding that the “mental incapacity defense naturally goes to both the entire contract and the specific agreement to arbitrate in the contract.” Id. at 1273. Thus, under the Tenth Circuit’s view, the mental incapacity defense places the “making” of the arbitration agreement at issue under Section 4 of the FAA, giving the court authority to determine whether the parties have actually agreed to arbitration. Id. 293 S.W.3d at 185 (emphasis original); see also RSL Funding, 569 S.W.3d at 124. Agreeing with the Tenth Circuit, Morgan Stanley concluded by holding that: We agree that Prima Paint reserves to the court issues like the one here, that the signor lacked the mental capacity to assent. Accordingly, the trial court did not abuse its discretion in declining to yield the question to the arbitrator. 293 S.W.3d at 190. –16– Along those lines, Morgan Stanley cited a Florida opinion that succinctly phrases the distinction: A challenge to the very existence of any agreement between the parties is thus distinguishable from a challenge to the validity of a presumptively existing, signed document. Id. at 188 n.5 (quoting Operis Grp., Corp. v. E.I. at Doral, LLC, 973 So. 2d 485, 488 (Fla. Dist. Ct. App. 2007)). In sum, courts determine defenses like failure to sign, forgery, no authority to sign, or lack of contracting capacity that go to whether the parties ever actually made a contract in the first place and not whether the signed contract they lawfully made is otherwise enforceable. But (i) arbitration agreements in contracts signed by a resisting party with contracting capacity are presumptively valid; (ii) non-“making” defenses that go to the contract as a whole are always for the arbitrator to decide; and (iii) non-“making” defenses that go specifically to the separate arbitration agreement are for the court to decide (unless the parties delegated that decision to the arbitrator). 2. Justice Hecht’s Dissent Justice Hecht’s dissent illustrates why different rules exist for (i) contract making defenses such as failure to sign, forgery, no agent authority, and lack of contracting capacity as contrasted with (ii) defenses like fraud in the inducement, illegality, unconscionability, duress, and other defenses that attack a lawfully made contract. Specifically, citing FAA § 4, Justice Hecht wrote that before a court can –17– compel arbitration, “it must be satisfied that the making of the agreement for arbitration . . . is not an issue.” 293 S.W.3d at 192 (Hecht, J., dissenting) (internal quotation and footnote omitted). But he went on to explain the logical difficulty in permitting arbitrators to decide contract execution and contracting capacity defenses: But what if the challenge to the contract is that it never came into being? Since “arbitration is a matter of contract”, the issue must be one for the court to decide. Otherwise, an arbitrator would be put in the position of deciding whether he was authorized to decide the parties’ dispute, concluding either that he was not authorized, a logical circularity, or that he was, and raising himself by his own bootstraps. Thus, whether a person is bound by a contract he never signed is an issue for the court. So, too, would seem to be issues whether a person’s signature on a contract was forged, whether a person’s agent was authorized to sign, and whether an offer was withdrawn before a contract was signed. Id. at 192–93 (Hecht, J., dissenting) (footnotes omitted). B. Application Here, the majority opinion’s conclusion is faulty for several reasons. But before discussing those reasons, I observe that in the trial court the Sotero parties did not deny the arbitration agreement’s validity and instead focused their challenge on whether their claims fit that agreement’s scope: But here, Plaintiffs are not challenging the validity of the agreement to arbitrate, but rather whether the claims fall under the arbitration clause at all. . . . Plaintiffs are not disputing the terms of the agreement per se, rather, Plaintiffs argue that the agreement is irrelevant to their claims and thus, they are not subject to arbitration for them. [CR 95]. –18– Although their appellees’ brief is less emphatic on the point, it doesn’t contest the arbitration agreement’s validity either.3 Thus, even they at least implicitly recognized and applied the separability doctrine in their arguments. And their failure to assert that ground for denying the motions to compel prevents the majority opinion from relying on that ground for them. Ridge Nat. Res., L.L.C. v. Double Eagle Royalty, L.P., 564 S.W.3d 105, 121 (Tex. App.—El Paso 2018, no pet). 1. The majority opinion ignores the separability doctrine. Sotero signed the contract and initialed every page, including the pages containing the parties’ arbitration agreement. The Sotero parties do not argue otherwise. Nor do they suggest that she lacked legal or mental capacity to enter into either agreement. And the signed contract conclusively establishes that there was a completed offer and acceptance of both the Licensee and Lease Agreement’s and the arbitration agreement’s terms and conditions. Nor does the majority opinion discuss, let alone rest on, any defense specific to the arbitration agreement itself. Specifically, the majority opinion does not assert that there is any meeting of the minds failure regarding the actual arbitration agreement’s essential terms. That the parties dispute the arbitration agreement’s 3 In the trial court, the Sotero parties’ amended surreply to defendants’ reply brief argued that the arbitration agreement expired on December 31, 2017 (when they say that the Lease portion of the License and Lease Agreement expired) but the License portion of the License and Lease Agreement was automatically renewed. They did not, however, argue that the entire contract was void for lack of a meeting of the minds based on their interpretation of the contract’s duration clause. They made similar arguments during oral argument in the trial court. But again, they did not argue that the entire contract was void for lack of a meeting of the minds based on the duration clause or otherwise. –19– scope doesn’t mean that they didn’t agree on a scope at all. Rather, it proves just the opposite. Furthermore, the logical circuity and bootstrap problems Justice Hecht identified in his In re Morgan Stanley dissent don’t pertain to a defense that the contract as a whole fails for lack of a meeting of the minds on the contract’s essential terms where, as here, the resisting party signed the contract; she had the lawful capacity to do so; and there is no legal impediment to the parties having made a presumptively valid written and signed contract containing an arbitration clause. Rather, that analysis is a matter of contract construction and is the daily grist of commercial litigation, be it in the courts or arbitration. Thus, based on the separability doctrine and these facts, the arbitration clause itself is a binding and enforceable standalone contract to which the majority opinion offers no defense, much less a viable one. (The Sotero parties’ appellees’ brief omits their unconscionability arguments, and the majority opinion ignores them too. Therefore, this dissent does not address those arguments either.) Based on the bedrock separability doctrine, the majority opinion errs by considering a nonBuckeye contract making defense to the License and Lease Agreement as a whole, which issue the law reserves to the arbitrator. –20– 2. The majority opinion’s cases don’t help the majority opinion. a. Ridge Natural Resources Ridge Natural Resources, L.L.C. v. Double Eagle Royalty, L.P. involved a contract calling for arbitration under both JAMS and AAA administration and rules. The trial court denied the defendant’s motion to compel arbitration and the defendant appealed. The El Paso Court of Appeals reversed. 564 S.W.3d at 139–40. The majority opinion’s reliance on Ridge is misplaced because Ridge actually supports this dissent and contradicts the majority opinion’s analytical framework. In short, Ridge holds that the defendant seeking to compel arbitration made a prima facie case that a valid arbitration agreement existed (despite the alleged ambiguity regarding the selected administrator and rules) because “the uncontested existence of the non-movant’s signature on an arbitration agreement meets the evidentiary standard necessary to prove the prima facie existence of an arbitration agreement.” Id. at 122. Thus, the burden shifted to the nonmovant to provide a reason why the arbitration agreement was defective. Id. That court further explained that, notwithstanding the conflicting terms regarding the arbitration administrator and rules, the contracting parties’ signatures on the lease were strong evidence that offeree accepted the offeror’s terms and that the parties therefore concluded negotiations, met minds, and agreed to be bound. Id. Accordingly, the movant made its prima facie case, and the burden shifted to the nonmovant to provide a reason why the arbitration agreement was defective. –21– Because the nonmovant never urged the ground that the trial court should deny the motion to compel based on the ambiguity, the court of appeals could not affirm the order on that basis. Id. In the present case, Baby Dolls is in an even better position than was Ridge. Here, like Ridge, there is no question about the legitimacy of Sotero’s signature on the contract. And not only did the Sotero parties, like the Ridge nonmovants, never assert as a ground for denying the motions to compel that the arbitration agreement itself contained an irreconcilable ambiguity that would negate its effective offer and acceptance, but they affirmatively conceded the arbitration agreement’s validity and argued (as relevant to this discussion) merely that the agreement’s scope did not cover their disputes. Furthermore, as explained in part II.B.3 below, the arbitration clause’s meaning as an independent agreement is unambiguous and, to the extent warranted, there is a reasonable interpretation of the § 3 duration clause that the majority opinion finds confusing. Even if the parties’ sometimes interchangeable use of “agreement” and “license” created some form of ambiguity, that ambiguity would not necessarily strike the arbitration clause’s death knell. Rather, for an interpretational question to become a fatal meeting of the minds failure, it must constitute an irresolvable conflict affecting an essential term. Id. at 124–25. Otherwise, the majority opinion would render every contract that is ambiguous on a –22– material term null from its inception regardless of whether the ambiguity is resolvable, a result at odds with a millennium of common law contract law. Because the majority opinion’s perceived quandary is easily resolved by a common sense reading of the contract as a whole under the applicable rules of construction, there is no irreconcilable conflict at issue. b. Texas La Fiesta Auto Sales, LLC v. Belk The majority opinion’s reliance on Texas La Fiesta Auto Sales, LLC v. Belk, 349 S.W.3d 872 (Tex. App.—Houston [14th Dist.] 2011, no pet.) is likewise misplaced. The issue in that case was whether a subsequent agreement revoked a prior arbitration agreement. Our sister court held that question was a contract existence issue for the courts to decide. Id. at 881. Given that revocation is a mirror image offer and acceptance issue, the result is unremarkable. The majority opinion further errs by failing to recognize that the parties effectively delegated all other issues regarding the contract’s validity, scope, and breadth to the arbitrator. 3. The majority opinion ignores the parties’ delegation of arbitrability issues to the arbitrator. Federal and Texas law permit parties to delegate most arbitrability issues to the arbitrator, if they do so in clear and unmistakable terms. E.g., Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 527, 529–30 (2019); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942–43 (1995); RSL Funding, 569 S.W.3d –23– as 121. Courts must enforce such contractual delegations of authority—even if they believe the movant’s arbitrability argument is “wholly groundless.” Henry Schein, 139 S. Ct. at 529. Texas law respects and enforces contracts that delegate these types of arbitration clause challenges to the arbitrator. See In re Labatt Food Serv., L.P., 279 S.W.3d 640, 648 (Tex. 2009) (orig. proceeding) (“[A] challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”) The obvious exceptions are questions involving the Buckeye contract making defenses of no signature, no authority, and no capacity that, if applicable, would preclude making the delegation agreement as well. See RSL Funding, 569 S.W.3d at 121, 124–25. But again, this case does not involve those issues. So the question is whether the parties clearly and unmistakably agreed to delegate validity and scope issues to the arbitrator. Having misapplied the separability doctrine, the majority opinion doesn’t get to that issue. Nonetheless, the arbitration clause provides the required delegation: ARBITRATION SHALL BE THE SOLE FORUM TO DETERMINE THE VALIDITY, SCOPE AND BREA[D]TH OF THIS AGREEMENT. It is hard to imagine a more clear and unmistakable agreement to delegate to the arbitrator the authority to decide issues regarding their arbitration agreement’s validity and scope. Because it includes both validity and scope issues, this sentence alone delegates both issues to the arbitrator. See Dallas Food & Beverage, LLC v. –24– Lantrip, No. 05-17-00647-CV, 2018 WL 1026188, at *2 (Tex. App.—Dallas Feb. 23, 2018, no pet.) (mem. op.) (delegation of validity alone not sufficient to also delegate scope). Just because the parties disagree regarding that agreement’s scope doesn’t mean they failed to agree to a scope; it means only that they disagree as to what the scope they agreed to covers. Determining a contract’s scope is a contract interpretation issue that is daily bread for courts and arbitrators alike. To conclude otherwise would invalidate the contract in virtually every contract breach case. Thus, as they had the right to do, the parties contractually delegated to the arbitrator the authority to determine (i) the validity issue the majority opinion does decide and (ii) the scope issue the Sotero parties asked the court to decide. Accordingly, the law requires us to reverse the trial court’s orders and remand the case for the trial court to compel arbitration regarding any validity, scope, and merits issues without considering the contract interpretation issues regarding whether the parties’ non-arbitration contract terms as a whole are unenforceable for failure to reach adequate agreement. Moreover, as shown below, the majority opinion’s void for vagueness conclusion misapplies Texas contract construction principles. –25– 4. The License and Lease Agreement doesn’t lack agreement on the contract’s essential terms. a. Introduction The term “meeting of the minds” refers to the parties’ mutual understanding and assent to the expression of their agreement. Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.—Dallas 1999, pet. denied). To create an enforceable contract, the parties’ minds must meet with respect to the agreement’s subject matter and all its essential terms. Id. They must agree to the same thing, in the same sense, at the same time. Id. Whether there was a meeting of the minds is based on an objective standard of what the parties said and did rather than their subjective state of mind. Crisp Analytical Lab, L.L.C. v. Jakalam Props., Ltd., 422 S.W.3d 85, 89 (Tex. App.—Dallas 2014, pet. denied). Here, the parties’ signed and detailed contract proves that they agreed to the same things, in the same sense, at the same time—their agreement is written down in great detail. And their contract’s subject matter is undeniable—they wanted to memorialize the terms and conditions by which Sotero could use designated parts of Baby Dolls’ venue for her own business purposes. It is also obvious that they were trying to avoid creating an employee–employer relationship. Their business arrangement had aspects similar to a combination of a license to use, a real estate lease of undivided space, and an independent contractor relationship. Thus, the –26– question is whether their written expression is sufficiently definite as to the essential terms of those arrangements to be enforced as a contract. Resolving that question involves the application of contract construction principles, generally, and specific principles concerning this particular issue. The Texas Supreme Court in Fischer v. CTMI, L.L.C., 479 S.W.3d 231 (Tex. 2016) provides substantial guidance on how to resolve the “meeting of the minds” issue. b. General Principles A court interpreting an arbitration agreement applies ordinary contract principles in determining the agreement’s existence and reach. Rubiola, 334 S.W.3d at 224 (“Under the FAA, ordinary principles of state contract law determine whether there is a valid agreement to arbitrate.”); Ascendant Anesthesia PLLC v. Abazi, 348 S.W.3d 454, 458 (Tex. App.—Dallas 2011, no pet.) (“Whether an arbitration clause imposes a duty to arbitrate is a matter of contract interpretation . . . .”). Thus, we must apply ordinary Texas contract principles to resolve the void for vagueness issue. In construing a written contract, we must ascertain and give effect to the parties’ intentions as expressed in the document. Frost Nat’l Bank v. L&F Distribs., Ltd., 165 S.W.3d 310, 311–12 (Tex. 2005) (per curiam); J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). In seeking to determine the parties’ intent, we construe contracts from a utilitarian standpoint, bearing in mind the –27– particular business activity sought to be served. See Frost Nat’l Bank, 165 S.W.3d at 311. Additionally, we consider the entire writing and attempt to harmonize and give effect to all its provisions by analyzing them with reference to the whole agreement. Id. at 312; Webster, 128 S.W.3d at 229. “No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument.” Webster, 128 S.W.3d at 229. c. Sufficiency of Agreement Principles Fischer explains in detail the standards courts consider when deciding whether contract terms are sufficient to constitute an enforceable contract. To begin, an enforceable contract must address all of its essential terms with a reasonable degree of certainty. 479 S.W.3d at 237. Although it is difficult to say just what particularity or refinement of terms is essential to meet the reasonable degree of certainty requirement, “a contract must at least be sufficiently definite to confirm that both parties actually intended to be contractually bound.” Id. To that end, the terms must be sufficiently definite that a court can understand the parties’ obligations and provide an adequate remedy if they are breached. Id. However, a contract need be definite and certain only as to those terms that are material and essential to the parties’ agreement. Id. Material and essential terms are those that the parties would reasonably regard as vitally important ingredients of their bargain, which is determined on a case by case basis. Id. –28– Several additional Fischer principles guide our analysis: First, we may neither rewrite the parties’ contract nor add to its language. Instead, we must construe the contract as a whole and “evaluate the overall agreement to determine what purposes the parties had in mind when they signed it.” Id. at 239 (internal quotation omitted). Second, because the law disfavors forfeitures, courts will find terms to be sufficiently definite whenever the language is reasonably susceptible to that interpretation. Id. If an instrument admits of two constructions, one that would make it valid and the other invalid, the former prevails. Id. Texas does not favor forfeitures and courts construe contracts to avoid them. Id. Thus, if the parties clearly intended to agree and a reasonably certain basis for granting a remedy exists, courts will find the contract terms definite enough to provide that remedy. Id. When the parties’ conduct shows conclusively that they intended to conclude a binding agreement, courts endeavor, if possible, to attach a sufficiently definite meaning to the bargain. Id. Third, when construing an agreement to avoid forfeiture, courts may imply terms that can reasonably be implied. Id. “Expressions that at first appear incomplete or uncertain are often readily made clear and plain by the aid of common usage and reasonable implications of fact.” Id. (quoting Bendalin v. Delgado, 406 S.W.2d 897, 900 (Tex. 1966) (quoting RESTATEMENT OF THE LAW OF CONTRACTS § 370 & cmt. c)). For example, courts often imply terms setting a reasonable time –29– of payment—or a reasonable time during which the contract will remain effective. Id. (citing Tanenbaum Textile Co. v. Sidran, 423 S.W.2d 635, 637 (Tex. App.— Dallas 1967, writ ref’d n.r.e.) (“Where a contract is silent as to the time it is to run, or provides that it is to run for an indefinite term, . . . the law will imply that a reasonable time is meant.”)). Fourth, an apparently indefinite term may be given precision by usage of trade or the parties’ course of dealings. Id. Terms may be supplied by factual implication, and in recurring situations the law often supplies a term absent a contrary agreement. Id. at 239–40. Fifth, and finally, courts are guided by the principle that part performance under an agreement may remove uncertainty and establish that a contract is enforceable because a bargain has been formed. Id. at 240. Furthermore, the parties’ actions relying on an agreement may make a contractual remedy appropriate even though uncertainty is not removed. Id. When the parties’ actions demonstrate their intent to conclude a binding agreement, although one or more terms are left open, courts endeavor, if possible, to attach a sufficiently definite meaning to the bargain. Id. That is, the law favors finding agreements sufficiently definite for enforcement, particularly where one of the parties has performed her part of the contract. Id. –30– d. Application to the License and Lease Agreement 1. Analysis of the Contract’s Terms Assuming the court, instead of the arbitrator, has the authority to decide whether the contract as a whole fails for lack of a meeting of the minds on its essential terms, the majority opinion gets that issue wrong. It gets it wrong because (i) it doesn’t identify what essential terms are missing; (ii) the parties sufficiently agreed on the essential terms; and (iii) the duration clause on which the majority opinion focuses is a run of the mill evergreen renewal clause capable of being given a reasonable construction. Regarding the first two points, among other particulars, the contract defines its subject matter; agrees on the nature of the parties’ working relationship (a nonemployee right for Sotero to use parts of Baby Dolls’ premises where she can perform her work); identifies services Baby Dolls will provide Sotero; specifies a work schedule; provides financial arrangements; and has numerous other terms and conditions. The parties specifically included a section addressing the contract’s initial term and renewal rights. Given the parties’ detailed effort to define and document the terms and conditions governing their relationship, it would be unreasonable to conclude that they did not intend to conclude a binding contract. The majority opinion does not identify any particular unaddressed essential term. Instead, it focuses on imperfect language in the § 3 duration clause to conclude that the entire contract was a waste of time, paper, and toner—not to mention that it –31– ignores the nearly two years under which Sotero and Baby Dolls supposedly conducted their relationship without a meeting of the minds. All of that despite the parties’ stated intent to form a binding contract and their statement that their agreement in fact represented their “meeting of the minds” regarding their relationship. To reach its conclusion, the majority opinion adapts the Sotero parties’ trial court argument that they were not bound by the arbitration agreement because it expired on December 31, 2017, when the agreement’s lease portion expired but the license portion continued under the § 3 renewal terms.4 But the contract delegates to the arbitrator this scope argument regarding whether the arbitration agreement applies to the Sotero parties’ claims that arose in 2019. However, the majority opinion elevates that argument to what it conceives is a Buckeye contract making defense along the lines of the no signature, no authority, and no capacity defenses that a court must decide and that theoretically could erase the arbitration clause along with the rest of the contract. Nonsense. 4 3. DURATION OF LICENSE AND TEMPORARY SPACE LEASE: TERMINATION OF LICENSE AND TEMPORARY SPACE LEASE This Agreement shall be for the period commencing on the date it is signed by all parties (Agreement Commencement Date) and shall terminate on December 31 of the year of execution (unless the parties agree, in writing, to modify the term). The License shall thereafter be automatically extended for successive one year periods running from January[ ]1 through December 31 of each year thereafter. Notwithstanding the foregoing, at any time after the first year of the License term, this License may be terminated (a) within thirty (30) days after the receipt of written termination notice from the Licensor to Licensee (b) the last day of the month that is ninety (90) days after the receipt of a written termination notice from Licensee to Licensor, or (c) such sooner date in accordance with paragraph 19 hereof, any such dates which shall be the “License Termination Date.” Upon the License Termination Date, Licensee shall have no further right to use and occupy the Premises and the License and lease rights granted to Licensee shall terminate. –32– First, that premise fails for the reasons stated in parts II.B.1 and 2 above. Second, although that clause could be better written, it is easily understood to be a typical “evergreen” renewal clause whereby the contract automatically renewed annually each January first unless either party gave a proper, written termination notice. These types of automatic renewal clauses are common clubs in a contract drafters’ golf bag. This is at least one reasonable way to construe § 3, and we must avoid the type of complete forfeiture the majority opinion produces if it is reasonably possible to do so. This automatic renewal construction is possible and reasonable. Therefore, we must adopt it. See Fischer, 479 S.W.3d at 239–40. What is implausible is the idea that the parties intended to have no contract at all, which is the result the majority opinion produces. It is also implausible that the parties meant that Sotero’s license rights and responsibilities would continue after December 31, 2017, sans accompanying terms and conditions defining those rights and responsibilities. Yet that is the result their § 3 reading would produce. It is not possible to have a license with no accompanying terms. So under what terms did Sotero and Baby Dolls operate from January 1, 2018, until her death? An obvious interpretation is that they understood their existing relationship to continue after that date on the same terms and conditions as before. Stated differently, their continued performance for more than a year after December –33– 31, 2017, is strong evidence that they understood their relationship was automatically renewed under their existing contract. Not only does this analysis negate the majority opinion’s “license agreement but not license termination” argument, but it also rends the majority opinion’s conclusion that the entire contract fails for lack of certainty regarding § 3’s meaning. Third, as the majority opinion observes, § 3 uses the words “Agreement” and “License” interchangeably. The majority opinion also correctly observes that the parties frequently used those words interchangeably throughout their contract. The obvious conclusion then is that the parties viewed the words to be interchangeable unless specific circumstances required a different usage. For example, it makes sense that an agreement would grant a license; whereas, it would make no sense for a license to grant a license or to grant an agreement. Likewise, it would make no sense for an agreement to grant an agreement. So those words necessarily have different meanings in the granting clause. But in other contexts using the words interchangeably doesn’t necessarily matter, especially since the contract is a license agreement after all. More specifically, the § 3 duration clause is one part of the contract where using the words interchangeably doesn’t matter. It doesn’t matter there because in that context it makes no sense to separate the continuing license from its accompanying terms and conditions on which it depends. –34– 2. Compliance with the Guiding Principles The majority opinion’s analysis and conclusion do not comport with the guiding principles discussed in parts II.B.3.b and c above, but the analysis and conclusion discussed in this dissent do. For example, this dissent’s construction gives effect to the parties’ intent to have a potentially ongoing, post-2017 business relationship based on terms spelled out in their contract, including its embedded arbitration agreement. Thus, that construction gives effect to the parties’ intent when viewed from a utilitarian standpoint, bearing in mind the particular business activity sought to be served. Likewise, this dissent harmonizes § 3’s usage with the other contract provisions, without giving any single provision controlling effect, when construed in light of the entire contract and its purpose. The majority opinion doesn’t do that. Next, the dissent’s analysis satisfies the specific Fischer factors because it provides a sufficiently definite meaning such that a court can understand the parties’ obligations and provide an adequate remedy if necessary. It is easy to apply a run of the mill automatic renewal clause and determine whether the parties honored its notice and termination provisions. If they didn’t, a trial court has a variety of potential legal and equitable remedies available to it. This is routine stuff for trial courts and commercial arbitrators. The majority opinion, however, does not entertain the prospect that § 3 is merely an unartfully written automatic renewal clause. –35– Additionally, the dissent gives full meaning to the parties’ words without rewriting them, and it construes the contract as a whole and evaluates the overall agreement to implement the purposes the parties had in mind when they signed the contract—as opposed to the Sotero parties’ after the fact wishes. Furthermore, the dissent avoids a forfeiture, while the majority opinion foists a complete one on the parties. Moreover, courts are able to resolve perceived uncertainties regarding a contract’s duration by reference to common usages. Here, this opinion recognizes that automatic renewal clauses are often used in contracts; whereas, the majority opinion ignores that fact. Similarly, as shown by our recent decision in Dallas Food & Beverage, LLC v. Lantrip, No. 05-17-00647-CV, 2018 WL 1026188 (Tex. App.— Dallas Feb. 23, 2018, no pet.) (mem. op.), these lease agreement constructs are common in this community, which fact the dissent recognizes. Finally, the parties’ continued performance for more than a year after the 2017 initial contract term end date is powerful evidence they understood that Sotero’s license and its accompanying terms continued during that post-2017 time period. Notably, there is no evidence suggesting that Sotero and Baby Dolls negotiated a different contract covering that span. Because there can be no license without at least some surrounding terms, the logical inference is that they continued their relationship under their existing contract. The majority opinion, however, gives no credence to that possibility. –36– C. Occam’s Razor As the majority opinion posits, it is often correct that the simplest answer is the best answer. However, a thorough and correct answer always trumps a simple and wrong answer. III. CONCLUSION In sum, the majority opinion ignores common sense and works to destroy the parties’ expressed intent given the business and utilitarian goals they were striving to achieve. For all of these reasons, we should (i) treat the Sotero/Baby Dolls embedded arbitration agreement as a standalone, independent contract; (ii) construe that independent contract according to normal contract construction rules; (iii) reverse the trial court’s orders denying Baby Dolls’ motions to compel arbitration; and (iv) remand the case for further proceedings consistent with this opinion. Because the majority opinion doesn’t do that, I dissent. /Bill Whitehill/ BILL WHITEHILL JUSTICE 191443DF.P05 –37– LICENSE AND LEASE AGREEMENT NOTICE: THIS IS A LEGAL CONTRACT THAT AFFECTS THE LEGAL RIGHTS 0F TIE PARTES TO THIS CONTRACT —READ IT! - AGREEMENT COMMENCEMENT DATE: ji/a’y/i 7 LICENSOR Baby Dolls Saloon—Dallas (the “Club" or “Licensur”) LICENSEE NAME: LICENSEE Stage Name: O 0.- 1 (‘Iicensee") a \mm ’J/M / PRBMSEGM 0250 Shady Trail, Dallas, Dallas County, Texas LICENSEE ACKNOWLEDGES THAT LICENSEE HAS READ AND REVIEWED THIS AGREEMENT INCLUDING THE ATTACHED TERMS AND CONDITIONS ET ITS ENTIRETY, THAT LICENSEE HAS BEEN GIVEN AN OPPORTUNITY T0 ASK LICENSOR' QUESTIONS ABOUT IT 0R EXPRESS ANY CONCERNS ABOUT THIS DOCUMENT, AND THAT LICENSEE HAS E&D AN OPPORTUNITY T0 CONSULT WITH AN ATTORNEY 0F LICENSEE’S CHOICE PRIOR TO ENTERING INTO THIS AGREEMENT. LICENSEE ACKNO'W'IEDGES THAT LICENSEE UNDERSTANDS THE TERM AND CONDITIONS 0F THIS AGREEMENTAND IQTOWH‘IGLYAND FREELYAGREES TO ABBJE BY THEM. THIS AGREEMENTREPLACES ANY PRIOR AGREEMENT BETWEEN THE PARTIES, AND SINCE THIS AGREEMENT IS TEE MOST ACCURATE DESCRIPTION OF THE NATURE OF THE RELATIONSHIP 0F THE PARTIES, AND REPRESENTS WHAT THE "MEETING OF THE MINDS" SHOULD HAVE BEEN WHEN TEE PARTIES ESTABLISHED THEE RELATIONSHE', THE TERMS AND CONDITIONS HEREIN ARE DEENIED EFFECTIVE FROM THE DATE 0F ANY PRIOR AGREEMENT BETWEEN THE PARTIES, SHOULD ONE EXIST. AGREEMENT 1's enteged into by the "LICENSOR" and "LICENSEE" for the leasing ofce aiu portions ofthe This "Premises” and the grant ofLicense related thereto as follows: LICENSElLEASE TERMS AND CONDITIONS 1. PURPOSE The Linens or operates an adult cabaret on the Premises, and Licensee, who is engaged in the-independen y-established and occupation ofprofessional exotic dance entertainment and who runs Licensee’s own business that provides such entertaimnent services,’ desires to lease om the Club, jointly together with other similar eutertaincrs and up on the trade terms contained iuthis Agreement, the right to use certain areas ofthe Premises for activities related to the presentation of live dance entertainment to the adult public. 2. GRANT OF HCENSEILEASE RIGHT Licensee hereby licenses -om the Licensur the right "during normal business hours ofLicensor to jointly, along'wi l other entertainers, use the stage areas and cartain other portions of the Premises designated by the Licensor for the performing of live erotic dance entertainment and related activities, upon the tenns and conditions contained in this Agreement The Licensor hereby grants Licensee a temporary, revocable license (the “License") and non-exclusive n'ght to use and occupy the designated portions nf the Premises (the ‘Temporaxy Space Lease” or the “Lease”) on the Agreement Commencement Date and continuing until the Tenmination Date, de nedherein, subj ect . ($1;ng Licensee’s Initials Pagel ofll Page 182 to the terms and conditions contained herein. This License shall be limited t0 Licensee’s use and occupancy oftha Premises 'as an erotic entertainer/dancer and Licensee shallbe entitled to perform such entertainment services at the Club. Licensee shall not use or occupy the Club or Premises or Agreement. 3 act or fail to act in any way which would constitute an event of default by Licensee under this DURATION 0F LICENSE AND TEMP ORARY SPACE LEASE: TERMINATION 0F LICENSE AND TEMPORARY SPACE LEASE . This Agreement shall be for the period commencing on the date it is signed by all parties (Ageemant Commencement Date) and shall terminate on December 31 ofthe year of execution (unless the parties agrea, in Writing, to modify the term). The License shall thereafter be automatically extended for successive one year periods running om Januaryl through December 31 of each year therea er. Notwi zstanding the foregoing, at any time a er the rst year of the License term, this License may be terminated (a) within thirty (30) days after the receipt ofm'itten termination notice . -om the Licensor to Licensee (b) the last day of the month that is ninety (90) days after the receipt of a written termination notice from Licensee to Lie ensor, or (c) such so oner date in accordance with paragraph 19 hereof; any such dates Which LICENSOR’S ADDITIONAL OBLIGATIONS 4. -Iu “License Tennination Date.” Upon the License Termination Date, Licensee shall have. no use and occupy the Premises and the Licen'se and lease rights granted to Licensee shall terminate. shall be_the further right to addition to leasing the Premises, the A. Club shall provide tn Licensee, at the Club’s expense: Music (including ASCAP/BMI/SESAC fees); Dressing Room Facilities; Lockers(as and if available); Wait Sta urnssopu Beverage Service; and Advertisement ofthe Club (any advertisement speci c to the Licensee shall be atLicensee’s sole cost and expense and the Club shall have no obligation to advertise for the Licénsee); 5. SUBLEASINGIAS SIGNMENT This Agreement is acknowledged to be personal in nature. This means that Licensee has 110 right to sublease orto assign any ofLicensee's rights or obligations in this Agreement to any other person without the express written consent ofthe Club. However, if Licensee 1's unable to ful ll Licensee’s contractual obligations dun‘ng any scheduled set, Licensee shall have the right to substitute the services ofany licensad entertainer Who has also entered into a License and Lease Agreement with thy: Club. Licensee may substitute only one entertainer per scheduled set and for the complete length of the scheduled set (Le. no partial set period substitution allawed). Any such substitution shall not, however, relieve Licensee ofthe rent, lost rent charge audio: contract damage obligations as contained inthis Agreement ifthe substitute entertainer fails to pay any of those fees due as a result of the subs tute's lease obligations. Licensor may assign Licensor’s rights and obligations hereimder, but may not in doing so otherwise affect Licencee’s License/Lease ofthe Premises. 6. NON—EXCLUSIVI’I‘Y ('i Licm als ‘ Page 2 of 11 Page 183 Licensee's obligations under entertainmant activities at' this Agreement are nonexclusive, meaning that Licensee is ‘ee to perform Licensee’s other businesses or at locations other than at the Club's Premises. USE 0F PREMISES 7.. Licensee agrees 1A. to: Perfonn clothed, semi—nude ( i. e. "tcpless") or nude (whichever is permitted by law) erotic, expressive dance entertainment at the Premises (but only in the manner and attire allowed under applicable law); B. Obtain, keep in full force and e ect, and have in Licensee’s possession at all times While Licensee on the Premises and available for inspection as may be required by law, any and all required and provide the Club with all necessary, went and accurate inforrriation about the Licensee reqm'rad by law for the Club to maintain. The failure of Licensee to maintain current and in Licensee’s possession a required license and/or permit shall not relieve Licensee of Licensee’s rent obligations as provided for in this Agreement; is liceHSes and/or permits C. Not violate any federal, state; Dr local laws Dr governmantal regulations. Licensee acknowledges, by Licensee which is in violation of any such laws or beyond the scope ofLicensee’s authority pursuant to this Agreement, and constitutes a material breach ofthe tenns ufthis Agreement; understands and agrees that any conduct regt aticms D. is Become knowledgeable of all laws and govemnental regu a ons that apply to Licensee's conduct while on the Premises and comply therewith and in particular, ofall regulations and laws related to business es that provide alcoholic beverages, businesses that are de ned as sexuallyoriented businesses and the Texas Penal Code. Licensee acknowledges, understands and agrees that any conduct Licensee which is in violation of any such laws or regulations is au aority pursuant to this Agreement, and constitutes beyond by the scopc ofLicensee's tenns of this earned while performing on the a material breach of the: Agreement; E. Maintain accurate daily records of all Premises, in accordance With all federal, F. G. income, including state, tips; and Inga! taxation laws and this Agreement; Pay for any damages Licensee causes to the Premises audiorto any ofthe Club 's personal prop arty, furniture, xtures, inventory, stock andfor equipment, nonnal wear and tear excepted; and Conduct his Dr herselfin a manner consistent With normal civil decorum, decency and etiquette‘in dealings inside the Premises 'and with customers and other independent contractors and maployees therein. Licensee acknowledges, understands and agrees that any conduct by Licensee which is in beyond the scope of Licensee’s authority pursuant to violation of any such conduct requirements is this ' Agreement, and constitutes a material breach of the tenns of this Agreement; Licensee sha not use the name, logo, trademarks, service marks ofLicensor without prior written authon'zation ofthe Licensor. 8. NATURE 0F PERFORMANCE .The Club has no right to direct or control the nature, content, character, manner or means ofLicensee‘s entertainment services or ofLicense'e’s performances. AS MAY 1N WRITING BE SPECIFICALLY RELEASED, WAIVED 0R TRANSFERRED, SO LONG AS Liag ‘égs-i’slr tials l’age 3 of 11 Page 184 THAT OF LICENSOR/LESSOR AND OF LICENSEE’S ENTERTAINMENT PERFORMANCES, INCLUDING BUT NOT LIMITED T0 ALL COPYRIGHTS AND RIGHTS 0F PUBLICITY. ALL 0F THESE RIGHTS BECOL ; THE PROPERTY 0F THE CLUB, HOWEVER. IF THE RELATIONSHIP IS EVER CHANGED T0 THAT OF EMPLOYER AND EMPLOYEE. TEE RELATIONSHW BETWEEN LICENSEE AND THE CLUB ' IS LICENSEE/LESSEE. LICENSEE SHALL OWNAND RETAIN ALL MIELLBCTUAL PROPERTY RIGHTS COSTUMES 9. Licensee shall supply all ofLicensae’s own commas and wearing apparel, which must comply with all applicable laws. The Club shall not control in any way the choice of costumes and/or wearing apparel made by Licensee. v NATURE OF BUSINESS 10. Licensee understands: 1) That the nature ofthe business Operated at the Premises is that ofadult entertainment; 2) that full or partial nudity and explicit language; and 3) that Licensee may be subjected Licensee may be subjected to either to advances by customers, to depictions or portrayals 6f a sexual nature, and to similar types of behavior. Licensee represents that Licensee is not, and will moths, o 'endcd by such conduct depictions, portrayals, and language, and that Licensee assumes any and all risks associated with being subjected to these" matters. PRIVACY 11. Licensee and the Club acknowledge that privacy and personal safety are important concerns to Licensee. Accordingly, the Club shall not knowingly disclose to any pars 0115 Who are not ass ociated with the Club, or to any govemmental entity, dep af uent, or agency, either the legal name of the Lie ensee, Licensee’s address, or telephone number, EXCEPT upon prior um'tten autho za on ofthe Licensee or as may be réquired by law. ENTERTAMENT FEES 12. I Based upon local industry custom and practice and in consultation With entertainers who lease space on the Premises, Club shall establish a xed fee for the price of certain performances engaged in on fhe Premises (referred to as "Entertainment Fee‘s"). C jrren y, the parties agree that the Entertainment Fee is that amount a_s set out in the Speci cations attachment hereto. Licensee agrees motto charge a customermorc orlessthanthe xed price for anysuch performance unless the Licensee noti es the Club inwri ng ofany ohafges to Licensee’s customers ofa higher or lower the amount. Nothingcontainedin s Agreement, however, shall lin tLicensee 'omrecaiving "tips" andlor gratuities over- THE PARTBS SPECIFICALLY ACKNOWLEDGE AND AGREE THAT ENTERTAINMENT FEES ARE NEITHER TIPS NOR GRATUI‘I‘IES BUT ARE RATHE MANDATORY CHARGES TO THE CUSTOMER AS THE PRICE" FOR OBTAIMNG THE SERVICE OF A PBRS ONAL ENTERTAINMENT PERFORMANCE and—ab‘ove the established price for such performances. 0F PARTIES 13. BUSINESS RELATIONsmI- A. The parties acknowledge that the business relationship — created between the Club and Licensee is that of (a) LicensorfLipensee and (b) landlord and tenantforthejoint and non-exclusive leasing ofthe Premises (meaning that other entertainers are also leasing the premises at the same time), and that this relationship is a material (meaning signi cant) part of this Agreement. THE PARTIES SPECDFICALLY DISAVOW ANY EMPLOYMENT RELATIONSHIP BETWEEN THEM, and. agree thatthis Agreement shall notbe intexpreted as creating an employer/employee relationship or any contract for employment. LICENSEE UNDERSTANDS THAT THE CLUB WILL NOT PAY LICENSEE ANY WAGE (WHETHER HOURLY 0R OTI-IBRMSE; OVBRTIME PAY, EXPENSES, OR OTHER EWLOYEE-RELATED BENEFITS The Club and Licensee acknowle dge that ifthq relationship between them was that ofgmployar and employee, Lice‘nses's Initials Page4 ofll Page 185 the Club would be reqt red to collect, and would retain, all Entertainment Fees paid by customers to LICENSEE SPECIFICALLY ACKNOWLEDGES AND AGREES THAT IN THE CJRCUMSTANCE OF AN EMPLOYER/EMPLOYEE RELATIONSI-DP ALL ENTERTAINMENT FEES WOULD BE, BO’ITI CONTRACTUALLY AND AS A MATTER 0F LAW, 'I‘I-IE PROPERTY OF THE CLUB AND WOULD liq: BE THE PROPERTY OF LICENSEE. THE PARTIES ACKNOWLEDGE THAT LICENSEE'S RIGHT TO OB TAJN AND KEEP ENTERTAMLIENTFEES PURSUANT TO THIS AGREEMENT IS SPECIFICALLY CONTINGENTAND CONDITIONED UPON THE BUSINESS RELATIONSHIP 0F THE PARTIES BEING THAT OF LICENSORILESSOR AND LICENSEE/LES SEE. Licensee. . C. . The parties additionally acknowledge that were the rela bnship between them to be that of employer and employee, Licensee's employment Would he "at will" (meaning Licensee could be red at any time withont cause and without priorno ce or warning), and that the Club would be entitled to control, among other things, License e's: Work schedule and the hours ofwork; job responsibilities; physical presentation (suchas make—up, hairstyle, eta); costumes and other wearing apparel; work habits; the selebtion ofLicensee’s customers; the manner and means ofLicensee’s performances; and Licensee’s ability to perform and for other businesses. Licensee hereby represents that Licensee desires to be able to make all ofthese choicés for Licensee and without the control ofthe Club, and the Club and Licensee agree by the terms of this Agreement that all such decisions are exclusiVBly reserved to the control of Licensee. nature, content character, at other locatiims LICENSEE FURTHER SPECIFICALLY RBPRESENTS THAT LICENSEE DOES NOT DESIRE ’I‘O PERFORM AS AN EMPLOYEE OF THE CLUB SUBJECT TO THE EMPLOYMENT TERMS AND CONDITIONS OUTLINBD 1N THIS PARAGRAPH 13. BUT. RATHER LICENSEE DESIRES TO PERFORM AS A UCENSEEITENANT CONSISTENT WITH THE OTHER PROVISIONS OF THIS AGREEMENT. D. If any court, tribunal, or governmental agency dctermines, or if Licensee at any time contends, claims, or between the parties is something other than that of LicensorlLessor and LicenszLessee and that Licensee is aten entitled to the payment ofmonies ‘om the Club, all ofthe following asserts, that the relationship shall apply: (i) ‘ In order to comply with applicable tax laws and to assure that the Club is not unjustly banned and that Licensee is not utg‘us y enriched bythe parties having nancially op stated pursuant to the terms of this Agreement, the Club and Licensee agree that Licensee shall surrender, reimburse and pay to the Club, all Entertainment Fees received by Licensee at any time Licensee perfumed on the Premises — all of which would otherwise have been collected and kept by the Club had they not been retained by Licensee under the terms of this Agreement and s_hall immediately provide a full accounting to the Club ofall tip income which Licensee received during that time; (ii) Any Entertainment Fees thatLicensee re JSes to return to the Club shall be deemed service charges to the customer and shall be accounted for by the Club as such. Licensee shall the Club the amouni of such Entertainment Fees and as such, the Club entitled to Jll wage credit for all Ente'rtainment shall owe then be Fees retained by Licensee, and such withheld fees shall therefore constitute wages paid from the Club to Licensee. In the event that Licensee refuses to return Entertainment Fees to the Club, the submit to the IRS and applicable state taxing authori a all Club shall immediately necessary lings regarding such income consistent with this subp atagmph; (iii) Ifdespite Licencee’s express nbliga on hereunder to maintain is unable acmt mords, the Licensee or unwilling to provide the Club with reliable: documentation of all Entertainment Fees received by Licensee at any time Licencee perfumed on the premises, Licensee and the Club hereby stipulate and agree that the amount of Entertainment Fees received by W als PageSofIl Page 186 Licensee shall be deemed to be an amount in excess ofany minimum hourly wage to which Licensee would be entitled as an employee. (iv) (v) The relationship 0f the parties shall hmnediately convert to an arrangement ofemployer and employee upon the texms as set forth in this paragraph. anytime Licensee believes that, irrespective ofthc terms ofthis Agreement, Licensee being heated as an employee byfhe Club or that Licencee’s relationship with the Club truly that of an employee, Licensee shall immediately, hut in no event later than three Ifat is is busingss days thereafter, provide notice to the Club in uniting of Licensee’s demand to be an employee consistent with the tcnns ofthis paragraph and applicable law, and shall also within the same time period begin reporting a1] ofLicensee’s tip income to the fully treated as Club on a daily basis; such tip reporting being required ofall tipped employees ofthe Club under the terms ofthe Intemal Revenue Code. TAXES 14. Licensee shall be solelyresponsible for, and shall pay, alI federal, state, and local taxes a'nd contributions imposed upon any income earned by Licensee while perfonning on the Premises (including but not limited to income taxes and social Club om any such taxes. Licensee shall keep all required records and supporting proof thereof. security obligations). Licensee shall indemni r and hold harmless the ‘ SCHEDULING 0F LEASE DATES 15. Licensee shall select, at least one week in adVance, any and all days that Licensee desires to lease the Premises during Club shall make the leased portion ofthe Premises availableto Licensee during those dates the followingweek, and fhe and times, subject only to space availability. Should Licensee desire not to perform on the Premisas at all during any given week, Licensee shall give the Club notice nfthis at least one week in advance. 01103 scheduled, neither Licensee nor the Club shall have le right to cancel or change any scheduled performance dates except as may be agreed to by Licensee and le Club. For each day that Licensee schedulw him or herselfto perform, Licensee agrees to be on the Premises, available to perfm'm, for a minimum number ofconsecu ve hours as stated 1'11 the "SPECIFICATIONS" section on the last page ofthis Agreement (one "set“). During those weeks that Licensee desires to perform Licensee agrees to lease space at the Premises for at least the minimum number of per sets week as stated in the "SPECIFICATIONS" saction ofthis Agreement. Licensee maybe permittedto lease space 011 the Premises on days when Licensee has not scheduled him or herselfto pexfonn, subject to space availability. IfLicensee misses an entire scheduled set, Licensee shall pay tn the Club as a lost rent charge, afee for each setmissed as stated in the T'SPECIFICATIONS" section of ais Agreement, which is to be paid by Licensee to the Club no later than by the end ofLicensee’s next set. IfLicensee fails to timely commence a scheduled Club as cuntract damages $8.00 for each one—halfhour missed up to a set; Licensee shall pay to the mmdmum ofthe lost rent charge as stated in the "SPECIFICATIONS" section ofthis Agreement, which is to be paid by Licensee tn the Club no later than by the end of that set. A11 lost rent charges and contract damages stated in n's Agreement are established in ew offhe fact that it would he di cult to determine the exact lost rent or damage incurred as a result of certain breaches of the terms of this Agreement. RENT 16. Licensee agrees to payrent to the Club (referred to as “set rent") in the amounts as stated in the “SPECIFICATIONS section of zis Agreement A11 set rent shall he paid ixmnediately on or befom completion of any set. " MATERIAL BREACH BY CLUB 17. _ Licens‘ée'a‘ini als Paga ofll Page 187 The Club materially breaches this A. Agreement by: Failing to provide to Licensee the leased portion of the Premises " Licensee; on any day as scheduled by _ B Failing to maintain any and all required and available licenses andfor pennits; C. Failing to maintain in full force ny and D Failing t0 maintain in full force all utilities services for the Premises; E Failing to maintain the Premises in a safe aII leases and subleases with the owner ofthe Premises; and and orderly manner. The Club shall not be liabla for any material breach as set forth in this paragraph due to acts ofGod, to any'other "cause beyond the reasonable control of the Club, or as a result of the action of any government entity or agency or le intexpreta on thereby of any law rule or regulation a 'ac ng the Club. 18. MATERIAL BREACH BY LICENSEE Licensee materially breaches Agreement by: this Failing to maintain any nd all required libenses andfor permits; Wi ly violating any faderal, state, or local law or regulation while on the Premises; Failing to appear for a scheduled set on two or more occasions in any one calendar month without proving a preper substitute as allowed and in the manner provided for herein; Failing to pay any set rent when due; Failing ta timely pay any assessed inst rent charges or contract damages; Claiming the business relationship with the Club as being other than that of a landlord and tenant; Violating any public health or safety rules or concerns; or Violating any oft e provisions ofthis Agreemexgt I TERMIMTION/BREACH mEFAULT 19. In the event Lie ens ea shall be in default ofany obligation to pay money under this Agra amen: or in the event Lie ens ee shall be in default ofany nan—monetaryprovision ofthis Agreement (including but not limited to violation anyFederaJ, state or local laws or regulations), the License granted to Licensee herain shall immediately terminate, and Licensor (i) immediately 'i ldraw thepermission hereby granted to Licensee and property there om, without being deemed to have committed any imprisonment. Such remedies shall be in addition to any other rights or remedies shall have the right to the extent permitted by law, to to use the Premises; manner of trespass, and (ii) remove assault or false all persons Licensor may have hereunder or at law or equity. In the event Licensor this shall he in default of Licensor’s obligations hereunder, Licensee’s sole remedy is to tenninate Agreement. Way Li‘aenmm itiats terminate this Agreement, without cause, upon thirty (30) days notice to the other party. Upon material Page 7 of 11 Page 188 non—hreachiug party the non-breaching breach, breach, the Agreement upon terminate this this Agreement upon twenty-four tWenty-four (24) the other hours notice notice to to the party may terminate other party, (24) hams party, otherwise may be or as as otherwise be provided law. Nothing in this or provided by Nothing in paragraph, however, this paragraph allow Licensee however, shall shall allow Licensee to to perform by law. perform on on the the or pennit, Without a license or Premises without a valid valid license applicable, or permit, if continue to if applicable, or to to continne in conduct engage in to engage conduct in violation of in violation of any laws, any laws, rules or or public or safety concerns. regulations, public health regulations, or health or safety rules or concerns. 20. 20. SEVERABILITY If any or the ofthis provision of applic a on thereof the application If this Agreement or to any person or thereofto circmnstance shall, or circumstance any provision for any shall, for any person reason and any reason and the extent, invalid or to the be invalid remainder of extent, be or unenforceable, the remainder and the to unenforceable, the this Agreement and such provision provision to the application application of ofthis ofsuch to the the a 'ected thereby, not be other person or circumstance shall not other person or be affucted but rather be enforced circumstance shall to the shall be enforced to rather shall thereby, but greatest extent extent permitted the greatest permitted law. In In the the event event that bylaw. paragraph, subparagraph, this Agreement be illegal that anytenn, Agreement is or portion ofthis portion of to be subparagraph, or declared to is declared illegal or by any term, paragraph, or this Agreement shall. to the unenforceable, this extent 'possible, unenforceable, be intexpreted the extent shall, to possible, be that provision interpreted as as if if that not a a part part of provision was was not of this this being the the intent of the the parties intent of Agreement; this Agreement, Agreement; it being that any illegal or parties that unenforceable portion or unenforceable poztiou of to the any illegal ofthis the extent Agreement, to extent be severable possible, be severable from Agreement as whole. Nevertheless, judicial, arbitration, possible, om this this Agreement as a a whole. in the the circumstance circmnstance of of a Nevertheless, in ajudicial, arbitation, or or administrative detennioation that the business that: determination thatthe relationship between business relationshlp Linen see and administrative and the the Club Club is other than between Licensee is something something other than that landlord and and tenant, relationship between of landlord Licensee and of between Licensee be controlled tenant, the the relationship and the the Cinb Club shall shall be controlled by the provisions provisions of of this this by the Agreement. Agreement. it 21. 21. GOVERNING LAW shall be the State Texas This pursuant to interpreted pursuant be interpreted This Agreement shall the laws laws of ofTexas to the ofthe State of 22. 22. 0F CLASS AND COLLECTIVE ACTIONS/ATTORNEY ACTIONS/ATI'ORNEY FEES AND ARBITRAHONIWAIVER‘ OF ARBITRATION/WAIVER. COSTS to binding parties agree that this subject to The parties binding arbitration this Agreement is subject to the the Federal Arbitm on Act agree that arbitration pursuant pursuant to Federal Arbitration Act (the (the this "FAA"), and disputes under this Agreement as well disputes well as Agreement. disputes that under and any arisen at at any time during that may have arisen as as any during the the may have any any disputes any time the parties; limited to including but but not not limited to under Federal or State law, governed and and settled relationship between the parties; including rela onship b tween under any settled be governed or State law, will will be any Federal “AAA”), Texas branch, by appointed by the American Texas branch, Arbitration Association Association (the arbitrator appointed indep endent arbitrator American Arbitration an impartial im ar al independent (the "AAA"), by the by an determinau'on of of the there exist and to the extent there grounds fur and binding arbitrator shall be final for vacation shall be the determination nal and and the the arbitrator the extent exist grounds vacation binding (except (except to that the the AAA Optional for Emergency Optional Rules agree that of arbita on statutes). Rules for award under applicable arbitration under applicable parties agree of an an award Emergency statutes). The parties 22. The Will have proceedings commenced under to any under this this Section Section 22. Protec on shall Measures of shall apply Measores no have no arbitrator will of Protection any proceedings The arbitrator apply to 01' award authority this Agreement the terms not conform to the oonditious of ofthis Ageement. Each award that terms and to make that does does not conform to and conditioos Each nding or make any ruling, finding authority to any ruling, for the and costs the arbitrator arbitration except arbitrator as fees of except for party the fees of the costs in expenses and as shall bear its own attorneys bear its fees, expeoses in any attorneys fees, any arbitration party shall specifically provided for arbitrator will award of no authority of attorneys t0 make an attorneys fees, Section 22. for in this Section 22. The The arbitrator an award authority to have no will have in this fees, speci cally provided the arbitrator. except to the fees arbitrator. The arbitration arbitration fees charged expenses charged by to make an an award arbitration except award for in any for the expenses and costs in and costs any arbitration by the a er expiration expiration or termination of self—executing and and shall shall remain in full full force force after or termination of this this remain in provision be self-executing herein shall contained herein shall be provision contained an award may be no ced arbitration arbita on proceeding, at any Agreement. properly noticed proceeding, an be to appear fails to the event event any appear at any properly Agreement. In In the party fitlls any party ofarbittation appear. The place place of arbitration shall entered shall such failure to appear. failure to notwithstanding such default or or otherwise, otherwise, notwithstanding such party against such entered against party by by default e ect insofar insofar give effect shall give arbitrator shall be IN WHICH THE PREMISES IS INWHICH IS LOCATED. LO CATED. The arbitrator IN TEXAS IN 1N TIIB THE COUNTY IN be resolved in with good be resolved in accordance with controversy be hereto that as that the the dispute or controversy diSpute or parties hereto tha desire desire of the parties to the possible to of the as possible arbifrator shall the arbitrator permitted by shall fullest extent extent permitted the fullest of this commercial practice and law, the provisions of and the this Agreement To the the provisions commercial practice by law, except to U.S. Code, to Code, except ofthe Title 9 of apply the American the U.S. and Title Association and Arbitration Association arbiu‘ation rules American Arbitration rules of ofthe the commercial commercial arbitration apply the ofthis Section 22 the provisions event the inwhich ofthjs the such rules this Section which event provisioos of this Section the provisions Section 22 in provisions of with the con ict with rules conflict extent that thatsuch the extent shall ' control. shall control. 1's 0R TBE PARTIES WAIVE ANY RIGHT TO LITIGATE SUCH CONTROVERSIES, DISPUTES, OR THE PARTIES PARTIES WAIVE CLAIMSINACOURTOFLAW,ANDWAIVETBERIGHTTOTRIALBYJURY.THEPARTIESWAIVE CLAIMS IN A COURT OF LAW, AND WAIVE THE RIGHT TO TRIAL BY JURY. 0R COLLECTIVE ANY RIGHT TO HAVE ANY CLAIM BETWEEN THEM ARBITRATED ON A CLASS OR ACTIONBASISANDTBERESHALLBENORIGHTORAUTHORITYFORANYCLAIMSBETWEENTHE ACTION BASIS AND THERE SHALL BEND RIGHT OR AUTHORITYFORANY CLAIMS BETWEEN THE A CLASS ACTION BASIS NOR ON A COLLECTIVE ACTION BASIS. PARTIES DNA PARTES TO BE ARBITRATED ON T0 BE REPRESENTED BY LEGAL COUNSEL AT THE RIGHT TO ~IES TIES SHALL HAVE TBE TE Licensee's Licensee’s Initials Initials Page 8 8 of of 11 11 Page Page 189 ARBITRATION. THE ARBITRATOR SHALL PERMIT REASONABLE DISCOVERY. THE PARTIES SHALL HAVE THE RIGHT T0 SUBPOENA WITNESSES 1N ORDER TO COMPEL THEIR ATTENDANCE AT HEARING AND TO CROSS—EXAMINE WITNESSES, AND THE ARBITRATOR'S DECISION SHALL BE 1N WRITING AND SHALL CONTAIN FINDINGS 0F FACT AND CONCLUSIONS 0F LAW. THE ARBITRATOR’S DECISION SHALL BE FINAL SUBJECT ONLY TO REVIEWPURSUANT TO THE FAA. FOR ANY CLAIMS OF THE LICENSEE BASED UPONANY FEDERAL, STATE 0R LOCAL STATUTORY PROTECTIONS, THE CLUB SHALL PAY ALL FEES CHARGED BY TEE ARBITRATOR. THE ARBITRATOR SHALL HAVE EXCLUSIVE AUTHORITY TO RESOLVE ANYANDALL DIS? UTES OVER THE VALIDITY 0F ANY PART OF THIS LICENSE, AND ANY AWARD BY THE ARBITRATOR MAY BE ENTERED AS A JUDGMENT IN ANY COURT HAVING JURISDICTION. . LICENSEE UNDERSTANDS AND ACKNOWLEDGES THAT BY SIGNING THIS AGREEMENT HEISHE SPECIFICALLY WAIVES ANY RIGHT T0 PARTICIPATE IN ANY CLASS ACTION OR COLLECTIVE ACTION AND IF AT ANY TIME LICENSEE IS DEEMED A MEMBER 0F ANY CLASS 0R COLLECTI‘T; GROUP CREATED BY ANY COURT IN ANY PROCEEDING. HEISHE WILL “OPT OUT” 0F SUCH CLASS OR COLLECTIVE GROUP ATTHE FIRST OPPORTUNITY. AND SHOULD ANYTHED PARTY PURSUE ANY CLAIMS ON BISIHER BEHALF LICENSEE SHALL WAIVE HISIHER RIGHTS TO ANY SUCH MONETARY RECOVERY. This Agreement to arbitrate shall apply to claims or disputes that are asserted by either partyhereto against third parties when the basis ofsuch dispute or the claims raised by a party hereto are, or arise from, disputes that are required under this Agreement. Suchapplies to claims made against o cers, directors, shareholders, and/or empluyees ofany corporate party, any allegedjoint actors, 01‘ based on any legal theniy, claim or right that a third party is liable for the actions or obligations ofa party to this Ageement. to he arbitrated The parties agree that ifany party refuses to proceed to arbitration ofa claim subject to arbitration herein upon demand that they do so, that party refusing to go to arbitration shall be liable to the reques ngidemanding party for all fees and cost incurred in compelling arbitration. request or ARBITRATION SHALL BE THE SOLE FORUM T0 DETER NE THE VALIDITY, SCOPE AND BREATH OF THIS AGREEMENT. 23. MISCELLANEOUS This Agreement constitutes the entire understanding ofthe parties. No representations or warranties have been made by either party to the other, or by anyone else, except as expressly set forth in this Agreement and the Speci cation attachment hereto, provided however, if this Agreement 1s not the ini al Agreement on this subject matter executed by the parties, the parties have also executed contemporaneously with the execution ofthis Ageement, a "Mutual Release ofCIaims" which 13 part and parcel ofthe Pax es’ agreement and made a part hereof, the same as iffu y copied and set out at length herein No prior oral or wn'tten statements, representations, pron ses and inducements have been made by either ofthe parties relating to the subject matter hereofwhich are not embodied in this Agreement. The Club's failure to insist On compliance or enforcement ofanyprovision ofthis Agreement shallnot affect the validity or enforceability of s Agreement or operate or be construed as a waiver of any lms enforcement ofthat provision or any other provision ofthis Agreement. This Agreement may not be modi ed or amended except in accordance with a writing signed by each ufthe parties 116113 o. License'e’s Initials PageQ ofll Page 190 SectionsfParagraphs 1,6,11,12, 13, 14, 15, 16, 19, 20, 21, 22, 23, 24, and 25 shall survive the tennination of this Agreement. The headings used in this Agreement are used for administrative purposes Only and do not uons mtesubstan ve matters be considered in construing the terms ofthis Agreement. to Time is 'ofthe essence in the performance ofthis Agreement. This Agreement may be executed in multiple original counterparts, in such event each ofwln'ch one and the same instnment. shall be deemed an original, but which together shall constitute Words of any gender used in this Agra ement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural and vice versa, unless the context requires otherwise. Ifany timeperiod or deadline hereunder expires 6n a Saturday, Sunday or legal holidayrecognized in the State ofTexas, the time period or deadlines shall be extended to the rst business day thereafter. The e 'ective date oftbis Nothing herein shall Agreement shall he upon the date it is signed - by all parties. be construed or constitute a partnership orjoint venture between the parties hereto. This Agreement shall be binding upon and shall inure t0 the bene t deicensor and Licensee and their resyective legal representatives, successors and assigns. - ~ Ifauy one or more offhe provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, and this illegality, or unenfarceability shall not a ‘ect any other provision hereof; Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. A11 parties will do all things reasonably necessary or appropriate to JI II the terms and conditions of s Agreement, including the execution ofall necessary documents partaim'ng thereto. BECAUSE 0F LEGAL RESTRICTIONS, THE CLUB WILL NOT ENTER INTO A AGREEMENT WITH AN LICENSEE WHO IS UNDER TIE AGE OF EIGHTEEN (18) AND THIS AGREEMENT IS NULL AND VOID IF LICENSEE IS NOT OF SUCH AGE. LICENSEE S?ECIFICALLY REPRE SENTS THAT LICENSEE IS OF THIS LAWFIEAGE OR OLDER, THAT LICENSEEHAS PROVIDED APPROPRIATE IDENTIFICATION VERIFYWG LICENSEE’S AGE, AND THAT SUCH IDENTIFICATION IS VALID AND AUTHENTIC. BY SIGNING THIS DO CUMEN’I', LICENSEE REPRE SENTS THAT LICENSEE HAS RECEIVED A COPY OF, AND HAS FULLY READ TI-HS AGREEMENT; THAT LICENSEE UNDERSTANDS, AND AGREES TO BE BOUND BY, ALL OF ITS TERMS; AND THAT LICENSEE HAS BEEN PERMITTED TO ASK QUESTIONS REGARDE‘JG ITS CONTENTS AND HAS BEEN GIVEN THE OPPORTUNITY TO HAVE IT REVIEWED BY PBRS ONS 0F LICENSEE’S CHOICE, INCLUDING ATTORNEYS AND ACCOUNTANTS. 24. RELEASE FROM LIABILITY Licensee agrees that Licensor shall notbe responsible or liable for any damage or injmyto any propertyar to anyperson orpersons at anytime on or aboutthe Premises arising om any cause whatsoever except Licensor’s willful misconduct. Licensee shall not hold Licensnr in any way responsible or liable therefore and will indemni and hold Licensor harmless — om and against any and aII claims, liabilities, penalties, damages, judgemenis and expenses (including, WEI], Licensee’s tials reasonable attorneys fees and disbursements) arising om injury to person or property ofany nature Page 10 of l l Page 191 arising out ofLicensee’s use or occupancy ofthe Premises and also for any other matter arising out of Licensee’s use or occupancy nfthe Premises incl ding damage or injmy caused 25. by Licensee. CONFIDENTIALITY Licensor and Licensee acknowledge that each may come into contact with information in all forms regarding the other’s business, clients and clicnts’ businesses. A11 such infomation shall be - deemed con dential in ammation and shall notbe used or communicated by the other at any time for any reason whatsoeirer. 26. NOTICES Any notices required or permitted to he given to either party under this Agreement shall be given to the representative parties at the address mitten provided in this Agreement by hand, by reputable overnight courier (for next business day delivery) or by Certi ed mail, return receipt requested. Such notices shall he deemed given upon: a) delivcry, inthe case of hand delivery; b) one business day a er mailing in the case of overnight courier, and c} three business days after mailing, in the case ofmailing. NOTICE: THIS IS A LEGAL CONTRACT. D0 NOT SIGN IT UNLESS YOU FULLY UNDERSTAND ALL OF ITS TERMS. IF YOU HAVE ANY QUESTIONS, FEEL FREE T0 TALK TO THE CLUB'S GENERAL MANAGER. ANY NEGOTIATED CHANGES TO THIS CONTRACT MUST BE INITIALED BY BOTH PARTIES IN THE MARGINS DIRECTLY NEXT TO THE MODIFICATIONS. WE SUGGEST THAT BEFORE SIGNING THIS CONTRACT, YOU HAVE IT REVIEWED BY AN ATTORNEY, ACCOUNTANT, 0R OTHER PERSON OF YOUR CHOICE. GREED T0 AND AMOWLEDGED BZY: . @ km%f’MT) 16K»! Licensee (LegEi name ofLicensee) Witness ' Date: . Address_(City State Zip) Phone a I _- v Licensor, - -_ . --i i"?-..:r & Atwd Representative ofthe Wing Baby Lls Falcon - I Dallas ' Date: r 9”.4: ((7 I email address _ I Permit Number Hm ”é: H iE Page 11 of11 Page 192 SPECIFICATIONS The agreed minimum number of “Sets” per week is 3. Each Scheduled perfomance day “Set” shall consist ofeither (a) an eight (8) consecutive hour period for day shift a seven (7) consecutive hour period for night shift (7:00 p.111. to 2:00 am), or (c) an eight (8) consecutive hour period for “cross" shift (any eight (8) consecutive hour period from I 1:00 am. to 2:00 (I 1:00 am. to 7:00 p.m.), (b) - am.) The agreed Rental charges 0R “SET FEES” for day shi (1' 1 :00 am. to 7:00 pm.) 1's $1 0.00 per shi /set. The agreed Rental charges 0R “SET FEES" for night shift (7:00 p.m. to 2:00 am), is $25.00 per shift, The agreed Rental charges OR “SET FEES” for cross shift (any eight (8) consecutive hour period from 11:00 am. $25.00 per shift. 2:00 am.) to 1's_ The agreed “loss The agreed rental fee“ 1’s an amount equal to the above rental chmgelSet Fee applicable for the set missed. current indusu'y customary Entertainment Fee for a private perfomance/table dance Date: Date: 1's $20.00 per dance. j (77/ Z TAIL” K Page 193

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