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EXHIBIT 10.2
SETTLEMENT AGREEMENT
This Settlement Agreement is entered into this _____ day of September,
2000 by and between GetronicsWang Co. LLC ("Getronics") and Olsy North America,
Inc. ("ONA") on the one hand, and MAI Systems Corporation ("MAI") on the other
hand.
WHEREAS Getronics is a Delaware limited liability company with a
principal place of business at Billerica, Massachusetts;
WHEREAS ONA is a Washington corporation with a principal place of
business at Billerica, Massachusetts;
WHEREAS MAI is a Delaware corporation with a principal place of
business at Irvine, California;
WHEREAS on December 2, 1996, ONA (then known as "Olivetti North
America, Inc.") and MAI entered into an Equipment Support Subcontract (the
"Contract") for the provision of support services by ONA to MAI customers;
WHEREAS the Contract provides for arbitration of disputes;
WHEREAS in 1999 Wang Global Corporation ("Wang") became the owner of
ONA;
WHEREAS disputes as to the contract arose between Wang and ONA on the
one hand and MAI on the other hand;
WHEREAS on July 26, 1999 Wang, by and through ONA, commenced an
arbitration against MAI before the American Arbitration Association pursuant to
the arbitration provision in the Contract [AAA No.
80Y 000 00000 00X] (the "Arbitration");
WHEREAS Getronics later became the owner of ONA;
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WHEREAS on November 3, 1999, Getronics and MAI entered into an
agreement for support services at the rate of $75,000 per week ("First Interim
Agreement");
WHEREAS on February 25, 2000, Getronics and MAI entered into an
agreement for support services at the rate of $52,000 per week ("Second Interim
Agreement");
WHEREAS on or about April 1, 2000 Getronics entered into certain
agreements with QualxServ LLC ("QualxServ") to provide support services to MAI
customers;
WHEREAS on June 8, 2000, Getronics purported to terminate the Contract
and notified MAI that the Second Interim Agreement would terminate on August 7,
2000;
WHEREAS on or about June 9, 2000 MAI filed a lawsuit in Los Angeles
Superior Court in California against Getronics seeking to stay the Arbitration
on the grounds that ONA, Wang and Getronics had assigned the Contract without
MAI's consent and therefore had forfeited the right to arbitrate the dispute
with MAI (the "Litigation");
WHEREAS Getronics sought in the Litigation to compel the Arbitration to
proceed and moved to attach certain assets of MAI; and
WHEREAS the Parties are desirous of fully and finally resolving their
disputes without further recourse to the Arbitration or the Litigation;
NOW THEREFORE, in exchange for the mutual consideration contained
herein, the receipt and sufficiency of which the Parties acknowledge, the
Parties hereby agree as follows:
1. Agreement for Judgment. MAI and Getronics shall file in the
Litigation a Stipulation for Entry of Judgment and [Proposed] Judgment
("Agreement for Judgment") in the form attached as Exhibit A. MAI acknowledges
that the Agreement for Judgment shall be enforceable in the Litigation in
accordance with the terms of Section 3 below, notwithstanding
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the Contract has an arbitration provision; notwithstanding that Wang, by and
through ONA, sought to recover damages against MAI in the Arbitration and
notwithstanding that Getronics sought in the Litigation to compel the
Arbitration to proceed rather than seeking damages directly in the Litigation
itself. If for some reason the Court declines to approve the Agreement for
Judgment, the parties will cooperate to file an alternative pleading in Los
Angeles Superior Court which accomplishes the same purpose (also referred to as
"Agreement for Judgment" below).
2. Payment Schedule. MAI agrees to pay Getronics the following amounts
on the following dates:
1. MAI will pay Getronics $134,000 on or before
September 15, 2000;
2. MAI will pay Getronics $150,000 on or before June 30,
2001;
3. MAI will make monthly payments in the amount of
$35,000 on the first day of each month from
September, 2000 through August, 2002, although MAI
shall be entitled to cure a default within five
business days upon written notice of default by
Getronics.
The payments must be made in cash via wire transfer (using existing wiring
instructions). MAI shall be entitled to pre-pay any of the above amounts without
penalty.
3. Enforcement of Agreement for Judgment. As long as MAI complies with
the payment schedule set forth in Section 2 (the "Payment Schedule"), Getronics
will refrain from enforcing the Agreement for Judgment. If MAI makes all the
payments required pursuant to the Payment Schedule, Getronics shall file a
Satisfaction of Judgment in the Litigation in the form attached as Exhibit B. In
the event that MAI fails to make a timely payment as required by the Payment
Schedule, Getronics shall be entitled to obtain immediate issuance of a writ of
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execution from the Los Angeles Superior Court, which issuance MAI shall not
oppose, to enforce the Agreement for Judgment up to the amount of the Agreement
for Judgment, less any payments actually received by Getronics pursuant to the
Payment Schedule.
4. Security Agreement. In connection with the Agreement for Judgment
MAI agrees to grant Getronics a security interest in the amount of $2 million in
all of its assets pursuant to a Security Agreement in the form attached as
Exhibit X. XXX warrants to Getronics that it has granted no currently
enforceable security agreements against its assets other than security
agreements with the lenders listed on Exhibit D. Getronics and MAI have entered
into a Subordination Agreement with the lenders listed on Exhibit D. A copy of
the Subordination Agreement is attached as Exhibit E.
5. Enforcement of the Security Agreement. As long as MAI complies with
the Payment Schedule, Getronics will refrain from enforcing the Security
Agreement. In the event that MAI fails to make a timely payment as required by
the Payment Schedule, Getronics will be entitled to enforce the Security
Agreement in the full amount, less any payments actually received by Getronics
pursuant to Paragraph 2.
6. Reduction in Amount of Security Agreement. At the request of MAI,
Getronics will agree to reductions in the amount of the Security Agreement to
reflect payments received by Getronics pursuant to the Payment Schedule. Upon
satisfaction of all of the payments required under the Payment Schedule,
Getronics will release its Security Interest and cancel the Security Agreement.
7. Interim Services. ONA, Getronics and MAI agree that the Contract has
been terminated. Getronics and MAI agree to continue the Second Interim
Agreement through September 15, 2000 or until such earlier time as MAI obtains
replacement support services for its
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customers. The support services will be provided to MAI customers by QualxServ
employees pursuant to the QualxServ Subcontract. In the event that MAI fails to
make its weekly payment of $52,000 on or before the Friday of a given week,
Getronics shall be entitled to direct QualxServ to discontinue support services
to MAI customers. MAI shall be entitled to negotiate with QualxServ for a
continuation of support services pursuant to a direct agreement between MAI and
QualxServ and to negotiate with other companies for support services. However,
in no event shall Getronics (or QualxServ) be required to provide support
services to MAI customers after September 15, 2000.
8. Parts and Tools. Getronics has provided MAI with a schedule of Fixed
Assets (Exhibit F) and a schedule of Consigned Parts and Consigned Tools (as
those terms are defined in the Contract) (Exhibit G) currently located at BCP
Systems in Placentia, California ("BCP") (a parts repair company used by
Getronics). Getronics will instruct BCP in writing, with a copy to MAI, that MAI
will be entitled to possession and control of all Fixed Assets, Consigned Parts
and Consigned Tools listed on Exhibits F and G. Such Fixed Assets, Consigned
Parts and Consigned Tools will be accepted by MAI on an "as is" basis with no
representations or warranties by Getronics. Getronics also will provide MAI with
lists of any Fixed Assets, Consigned Parts and Consigned Tools currently at any
location other than BCP as such lists become available. Getronics will work with
BCP to ensure that any such additional Fixed Assets, Consigned Parts and
Consigned Tools are made available to MAI, and MAI will accept any such
additional Fixed Assets, Consigned Parts and Consigned Tools on an "as is" basis
with no representations or warranties by Getronics.
9. MAI Release. For valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and except as otherwise provided in this
Settlement Agreement, MAI
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hereby fully and forever releases, acquits and discharges with prejudice
Getronics, and its parent corporations, related corporations, affiliates, sister
corporations, subsidiaries, divisions, groups, associates, owners, stockholders,
predecessors, successors, heirs, assigns, trustees, representatives, insurers,
partners and joint venturers, as well as each of their respective past and
present directors, officers, agents, attorneys and employees and each of them
(individually and collectively, the "Getronics Released Persons") of and from
any and all liabilities, claims, demands, actions, causes of action and rights
(contingent, accrued, inchoate or otherwise) that MAI has, claims to have, will
have, or may later ascertain it has, arising from, based upon or connected with
the following matters as interpreted most broadly:
(1) The Contract;
(2) The Arbitration;
(3) The Litigation;
(4) The transactions, occurrences, acts or omissions that
are the subject matter of the Arbitration or
Litigation;
(5) Any and all past or present business or other
relationships that have existed from time to time
between MAI, on the one hand, and Getronics or any of
the Getronics Released Persons, on the other hand.
Specifically excepted from this Release are claims for breach of the Settlement
Agreement. MAI makes its release of claims on its own behalf and on behalf of
its parent corporations, related corporations, affiliates, sister corporations,
subsidiaries, divisions, groups, associates, owners, stockholders, predecessors,
successors, heirs, assigns, trustees, representatives, insurers, partners and
joint venturers, as well as each of their respective past and present directors,
officers, agents,
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attorneys and employees and each of them, and agrees that its release of claims
shall benefit the Getronics Released Persons.
10. Getronics Release. For valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and except as otherwise provided in
this Settlement Agreement, Getronics hereby fully and forever releases, acquits
and discharges with prejudice MAI, and its parent corporations, related
corporations, affiliates, sister corporations, subsidiaries, divisions, groups,
associates, owners, stockholders, predecessors, successors, heirs, assigns,
trustees, representatives, insurers, partners and joint venturers, as well as
each of their respective past and present directors, officers, agents, attorneys
and employees and each of them (individually and collectively, the "MAI Released
Persons") of and from any and all liabilities, claims, demands, actions, causes
of action and rights (contingent, accrued, inchoate or otherwise) that Getronics
has, claims to have, will have, or may later ascertain it has, arising from,
based upon or connected with the following matters as interpreted most broadly:
(1) The Contract;
(2) The Arbitration;
(3) The Litigation;
(4) The transactions, occurrences, acts or omissions that
are the subject matter of the Arbitration and/or the
Litigation;
(5) Any and all past or present business or other
relationships that have existed from time to time
between Getronics, on the one hand, and MAI or any of
the MAI Released Persons, on the other hand.
Specifically excepted from this Release are claims for breach of the Settlement
Agreement. Getronics makes its release of claims on its own behalf and on behalf
of its parent corporations,
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related corporations, affiliates, sister corporations, subsidiaries, divisions,
groups, associates, owners, stockholders, predecessors, successors, heirs,
assigns, trustees, representatives, insurers, partners and joint venturers, as
well as each of their respective past and present directors, officers, agents,
attorneys and employees and each of them, and agrees that its release of claims
shall benefit the MAI Released Persons.
11. Waiver of Civil Code Section 1542. Both parties hereby waive all
rights under section 1542 of the Civil Code of the State of California, which
provides as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
In addition, the parties each hereby knowingly and voluntarily waive
any protection that may exist under any comparable or similar statutes and
principles of common law of any and all states of the United States or of the
United States.
12. Successors and Assigns. This Settlement Agreement shall bind and
inure to the benefit of the respective parties and Released Persons, as well as
their respective predecessors-in-interest, successors-in-interest, parents,
affiliates, subsidiaries and assigns.
13. Claims Owned By Getronics. Getronics warrants that it owns all of
the claims asserted against MAI and is authorized and empowered to settle all
claims on behalf of ONA and Wang Global Corporation.
14. Action To Be Taken In Arbitration. Getronics and MAI will jointly
advise the American Arbitration Association that the Arbitration has been
settled. The parties agree to share equally any unpaid costs to the American
Arbitration Association and to share equally in
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any refund of costs from the American Arbitration Association. The parties will
bear their own attorneys' fees in the Arbitration.
15. Action To Be Taken In Litigation. Getronics will withdraw its
motions for attachment and to compel arbitration in the Litigation. The parties
will bear their own expenses in the Litigation, including attorneys' fees.
16. Counterpart Signatures. This Settlement Agreement may be executed
in any number of counterparts. Any such counterpart, when executed, shall
constitute an original of this Settlement Agreement, and all such counterparts
together shall constitute one and the same Settlement Agreement. However, this
Settlement Agreement shall not be deemed effective until each party has executed
and delivered to counsel for the other party at least one counterpart of this
Settlement Agreement.
17. Integration Clause. This Settlement Agreement constitutes the
final, complete and exclusive agreement between MAI, on the one hand, and
Getronics, on the other hand. This Settlement Agreement supersedes any prior or
contemporaneous written or oral agreements between MAI or any of its
predecessors, parent corporations, subsidiaries, sister corporations, related
corporations, affiliates, partners or joint venturers, on the one hand, and
Getronics or any of its parent corporations, subsidiaries, sister corporations,
related corporations, affiliates, partners or joint venturers, on the other
hand. There are no representations, warranties, agreements, arrangements or
understandings, oral or written, between MAI or any of its predecessors, parent
corporations, subsidiaries, sister corporations, related corporations,
affiliates, partners or joint venturers, on the one hand, and Getronics or any
of its parent corporations, subsidiaries, sister corporations, related
corporations, affiliates, partners or joint
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venturers, on the other hand, relating to the subject matter of this Settlement
Agreement other than those expressed in this Settlement Agreement.
18. Amendments. This Settlement Agreement may not be amended or
modified except by a written agreement that is executed by both parties.
19. Legal Advice. Both parties have received independent legal advice
with respect to the advisability of entering into this Settlement Agreement.
Both parties have made such investigation of the facts pertaining to this
Settlement Agreement and of all other matters pertaining hereto as they deem
necessary.
20. Severability. If any portion of the Agreement shall be deemed
unenforceable, the remaining portions shall survive and be enforceable.
21. Governing Law. This Agreement shall be governed by the laws of the
State of California and be enforceable in courts of competent jurisdiction in
the State of California.
EXECUTED as a sealed instrument.
OLSY NORTH AMERICA, INC.
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By:
GETRONICSWANG CO. LLC
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By: Xxxxxx Xxxxx
MAI SYSTEMS CORPORATION
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By:
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