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EXHIBIT 10.2
SETTLEMENT AND RECONVEYANCE AGREEMENT
THIS SETTLEMENT AND RECONVEYANCE AGREEMENT (the "Agreement") is entered
into this 6th day of April, 2001 (the "Effective Date") by and between LOGIX
DEVELOPMENT CORPORATION, a Nevada corporation ("LDN"); GAMING SYSTEMS
INTERNATIONAL, a Nevada corporation ("GSI"); MAI SYSTEMS CORPORATION, a Delaware
corporation ("MAI"); and LOGIX DEVELOPMENT CORPORATION, a California corporation
("LDC").
RECITALS
WHEREAS, on June 18, 1999, a Contract of Sale and three Secured Notes (the
"Prior Notes") for the purchase of all assets of GSI by LDN was entered into by
and between the parties;
WHEREAS, MAI has declared and placed LDN and LDC on notice that they
believe defaults have occurred under the original Contract of Sale and the Prior
Notes; and
WHEREAS, it is the intent of the parties to enter into a settlement and
reconveyancing agreement to facilitate the complete transfer of the ownership of
LDN to MAI and GSI and to restructure the obligations of LDN and LDC as more
specifically provided herein.
NOW, THEREFORE, in consideration of the mutual covenants recited herein,
the receipt and adequacy of which is hereby acknowledged, the parties agree as
follows:
1 Reconveyance of Ownership. LDN hereby conveys and transfers all right, title
and interests in all intangible and tangible assets owned by LDN to MAI and
GSI forthwith.
2 Satisfaction of Prior Notes. In consideration of the reconveyance of the LDN
assets, and those considerations contained in this Agreement, MAI hereby
accepts such tangible and intangible assets as full and complete
satisfaction of the Prior Notes referenced in the Contract for Sale.
3 Cancellation of Inter-Company Debt/Non-Assumption of Certain Liabilities. It
is agreed that:
(a) Any debts between LDN and LDC, Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, and any
other entity owned in whole or in part by Xxxxx and Xxxx Xxxxxxxxx shall
be canceled, except for prior payroll checks issued to Xxxx Xxxxxxxxx,
totaling less than $50,000 in the aggregate, which shall be held by GSI
for a period of 90 days from the date of execution of this Agreement.
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(b) MAI, GSI or their designated affiliates shall not assume any
non-disclosed material liabilities as stated in the February 28th, 2001
balance sheet except those that subsequently occurred in the normal
course of business.
4 Restructuring of $1.1 Million Dollar Promissory Note. The parties hereby
agree that the $1.1 million dollar promissory Note guaranteed by LDC (the
"Note") will be restructured as follows:
(a) The Note will bear interest beginning from its date of execution. The
interest rate for the first 12 months shall be 8.75% per annum, and
interest shall be earned on the Note beginning from the date of this
Agreement;
(b) No payments upon the interest or principal of the Note shall be due for
the first twelve months;
(c) Beginning with the thirteenth month, 36 monthly payments shall be made
upon the interest and principal;
(d) Each payment shall be due on the last day of the associated calendar
month, with the first payment due on the last day of April, 2002 as
shown in the attached Amortization Schedule (Exhibit B);
(e) On each anniversary of this Agreement, the per-annum interest rate for
the following twelve months shall be determined based upon the
then-current Wall Street Journal Prime Interest Rate plus 2%;
(f) The amount of the monthly payment upon principal and interest shall be
determined so as to bring the principal balance to zero as of the 36th
payment, based upon the interest rate in effect for the Note as
determined above, which may cause the monthly payments for each 12 month
period to vary by a small amount;
(g) The Note shall be treated as a direct reduction loan for the purposes of
such interest calculation, with no prepayment penalty;
(h) LDC agrees to execute a promissory Note instrument to this effect;
(i) The principal amount due and owing under the Note shall be reduced by
the amount of credit received as a result of the sales price allocation
agreement by the parties as provided herein below; and
(j) The Parties agree that the Note may be assigned without requiring the
consent of LDC.
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5 Sales Price Allocation. It is agreed that should MAI sell all or a majority
of GSI or the assets thereof to a third party, this event will be treated as
a "Qualified Deal" provided that it falls within the time limits indicated
herein.
(a) The time limit shall be indefinite for any of the following entities and
any companies within their control: Ballys, Konami, MIS/Grips, and any
entity introduced to MAI by Xxxxx Xxxxxxxxx to a maximum of three
entities, so long as such additional entities are introduced to MAI
within 90 days of the Effective Date. It is understood that the company
names referred to herein are not necessarily the exact legal names of
the entities in question;
(b) The time limit shall be ninety (90) days for any third party other than
those listed pursuant to section (a) above with whom an agreement to the
terms and conditions of the deal are reached in that time frame;
(c) Should a Qualified Deal take place as described above, 30% of the deal
value shall reduce the $1.1 million Note; and
(d) In the event that there is an excess from a Qualified Deal after
reduction of the Note as outlined above, such excess shall be paid in
cash as a contingent commission to LDC, within 30 days from the time
that cash or equivalent instruments are received by MAI or GSI.
6 Disclosure. Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx, as officers and shareholders
of LDN, hereby disclose that to their personal knowledge the books and
records of LDN correctly and accurately reflect the financial affairs of the
company. To their personal knowledge, no litigation is currently filed
against the company except for two recently served small vendor collection
actions which are attached hereto. Neither Xxxx nor Xxxxx Xxxxxxxxx are
personally aware of any side "deals" or contracts outside the normal course
of business or off book or off balance sheet liabilities and hereby
represent that they have not created any. To their knowledge, company taxes
have been paid currently, though it is unknown what the current payroll
withholding status is.
7 Transfer of Ownership. LDN hereby transfers and conveys to MAI all
equipment, inventory, trade, furniture, accounts receivable, prepaid
expenses, bank accounts, contracts, intellectual property rights (whether
patent, copyright, trademark, trade name, service xxxx, or otherwise),
goodwill, the names "GAMING Systems International" "GSI," "GSI/Europe," and
"Gambit" (and all logos used together with those names), all warranties,
licenses, unfulfilled work orders, claims, choses in action, works in
progress including wireless and circuit board design, and customers and any
other assets listed in the attached UCC-1's. The trade name "Logix" is
retained by LDC. MAI agrees to change the corporate name of LDN within
ninety (90) days after the effective date of this Agreement so as not to
conflict with "Logix."
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8 LDC Transfer of Gambit. LDC hereby agrees to transfer all of its rights,
title and interest to the Gambit software (including those modules that have
been developed or are partially developed), associated intellectual
property, wireless technology, slot boards, preliminary patent applications
including source code and any and all related documentation. To the extent
that certain tools used in and required for the development of Gambit are
proprietary to LDC, it is agreed that LDC will xxxxx XXX a non-exclusive
license for the tools, and provide a copy of the tools to facilitate
completion and utilization of the software. Should MAI or any of its agents
or representatives seek to obtain letters patent, trademarks or copyrights
in any country of the world on all or part of the Gambit software system,
LDC agrees to cooperate fully in providing information, completing forms,
performing actions and obtaining the necessary signatures or assignments
required to obtain such letters patent, trademarks or copyrights. In the
event MAI shall be unable for any reason to obtain LDC's signature on any
document necessary for any purpose set forth in the foregoing sentence, LDC
hereby irrevocably designates and appoints each of MAI and its duly
authorized officers and agents as LDC's attorney-in-fact to act for and in
LDC's behalf and to stead to execute and file any such document and to do
all other lawfully permitted acts to further any such purpose with the same
force and effect as if executed and delivered by LDC, specifically with
regard only to the perfection and completion of patents upon portions of the
GAMBIT system for which preliminary protection was filed in October of 2000.
9 Release of MIS/Grips Restraints. LDN agrees to immediately contact MIS/GRIPS
and to confirm in writing that they are released from their confidentiality
agreement and may discuss their potential interest in purchasing LDN-GSI
with MAI.
10 Non-Competition. In consideration of the mutual covenants contained herein
and specifically the purchase price participation credit set forth in
Paragraph 4, LDC agrees not to compete in the development, sale,
representation or marketing of casino management software, until the later
of two years from the date of this Agreement or until the repayment of the
Note, whichever is longer.
11 Transfer of Stock. The shareholders of LDN shall provide their consent to:
(a) The release of the pledged shares of common stock of LDN (the "Shares")
to MAI pursuant to the Pledge Agreement between the parties executed as
of even date with the Contract of Sale; and
(b) The completion of the related Stock Powers conveying said Shares to MAI,
GSI or an affiliate of these entities.
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12 Transition Cooperation. It is agreed by the parties hereto that there shall
be full cooperation in the transition involving the reconveyance of the
assets and ownership of LDN as provided herein. It is specifically agreed as
follows:
(a) LDC shall identify those employees involved with the development and
continuing design of the Gambit software and make them available for
hiring by MAI or the GSI management, in most cases full-time;
(b) LDC shall provide, at no cost to MAI, a two-day overview of the Gambit
project at LDC's offices;
(c) Xxxxx Xxxxxxxxx will make himself available on an ongoing basis to
provide consulting services to MAI and/or the management of GSI to
facilitate the transfer and assist in the smooth transition of the
design team for the Gambit software at MAI's written request via
purchase order and based upon a week-to-week term. Xx. Xxxxxxxxx will
make himself available two days a week for a period not to exceed ninety
(90) days on an "as available and as needed basis" and compensated at
$200 per hour and approved expenses, except that the first 4 hours of
telephone consultation per month shall be without charge during this 90
day period;
(d) The parties agree to execute those instruments necessary to replace
themselves with persons appointed by MAI with regard to financial
documents and other transactions; and
(e) The current Board of Directors of LDN agree to resign (and the Board of
Directors nominated by MAI to accept such resignation) as soon as the
Board of Directors have accepted their positions.
13 Mutual Press Release. No party hereto shall make any public announcement or
issue any press release pertaining to this Agreement without the prior
written consent of the other.
14 Attorney's Fees/Venue. Should any litigation be commenced between any of the
parties hereto concerning this Agreement, the party prevailing in that
litigation shall be entitled, in addition to any other relief that may be
granted, to a reasonable sum as and for its attorneys' fees and shall be
determined by the court in that litigation or in a separate action brought
for that purpose. The parties agree that the venue for any enforcement
litigation shall be appropriate in the Superior Court of Orange County,
California.
15 Governing Law. This Agreement shall be governed and all rights and
liabilities under it shall be determined in accordance with the laws of the
State of California in effect on this date.
16 Counterpart and Facsimile. This Agreement may be signed in counterpart with
all counterpart signature pages being attached to be considered an original,
whole and enforceable document. Additionally, facsimile signatures shall be
treated as originals and enforceable for all intents and purposes.
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17 Further Assurances. Each party hereby agrees to take such other and further
actions and to execute such other documents and instruments as may be
required to carry out the intent and purposes of this Agreement.
18 Mutual Release. In consideration of the releases and promises contained
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged by each party hereto, the parties promise, agree and
generally release as follows:
(a) Except to such rights or claims as may be created by this Agreement,
including the Note, which obligations shall survive this Agreement, each
party and each of their respective parents, subsidiaries, divisions,
affiliates, related entities, present and former officers, directors,
shareholders, employees, attorneys, insurers and agents, and each of
them hereby release remise and forever discharge each of the other
parties and each of their respective officers, directors, shareholders,
employees, attorneys, insurers and agents, and each of them, from any
demands, rights and causes of action arising out of or related to the
aforementioned Contract for Sale and the Prior Notes.
(b) The parties acknowledge and agree that the release contained in
subparagraph (a) above is subject to the full and faithful performance
of the affirmative covenants contained in this Agreement by LDC, Xxxxx
Xxxxxxxxx, and Xxxx Xxxxxxxxx.
19 Confidentiality. Except by use of the language as indicated in this Section,
the parties further agree not to disclose the contents of this Agreement or
the fact of this Settlement, or any matters pertaining to this settlement
unless such disclosure is (i) lawfully required by any governmental agency;
(ii) otherwise required to be disclosed by law; (iii) necessary in any legal
proceeding in order to enforce any provisions of this Agreement. The parties
agree that they will notify each other in writing within five calendar days
of the receipt of any subpoena, court order, or administrative order
requiring disclosure of information subject to this non-disclosure
provision. The only allowable statement of the relationship between the
Parties is "MAI, Logix and GSI have reached an agreement that each believes
is very beneficial to GSI, and all parties are acting to carry out the terms
of this agreement. Please contact MAI for further details at..."
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IN WITNESS WHEREOF, all the parties have executed this Agreement as of the date
first above noted.
DATED: April __, 2001. LOGIX DEVELOPMENT CORPORATION,
a California corporation
By:
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DATED: April __, 2001. LOGIX DEVELOPMENT CORPORATION,
a Nevada corporation
By:
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DATED: April __, 2001. GAMING SYSTEMS INTERNATIONAL,
a Nevada corporation
By:
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DATED: April __, 2001. MAI SYSTEMS CORPORATION,
a Delaware corporation
By:
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DATED: April __, 2001
By:
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D. XXXXX XXXXXXXXX
DATED: April __, 2001
By:
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XXXX XXXXXXXXX
DATED: April __, 2001
By:
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XX. XXXXXX XXXXXXXX
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