EXHIBIT 10.13
PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT
THIS PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT ("this Agreement") is
made and entered into as of September 7, 2001, by and between MAI SYSTEMS
CORPORATION, a Delaware corporation ("MAI"), GAMING SYSTEMS INTERNATIONAL, a
Nevada corporation, now known as MAI SYSTEMS INTERNATIONAL ("MSI") and lOGIX
DEVELOPMENT CORPORATION, a Nevada corporation, now known as MAI DEVELOPMENT
CORPORATION ("MDC") (MAI, MSI and MDC are hereinafter sometimes referred to
herein as "Sellers"), the one hand and COAST BUSINESS CREDIT, a division of
Southern Pacific Bank, a California corporation ("Secured Party"), on the other
hand, in light of the following:
WHEREAS, Secured Party has extended financial accommodations to MAI and
HOTEL INFORMATION SYSTEMS, INC., a Delaware corporation ("Hotel") (MAI and Hotel
are collectively, the "Borrowers"), pursuant to that certain Loan and Security
Agreement, dated as of April 23, 1998, as the same has been amended from time to
time (the "Loan Agreement"), and pursuant to all other documents, agreements and
instruments executed and/or entered into by Borrowers in connection with the
Loan Agreement and delivered to Secured Party (the Loan Agreement and such other
documents, agreements and instruments hereinafter collectively referred to as
the "Loan Documents");
WHEREAS, pursuant to that certain Asset Purchase Agreement by and
between Sellers, on the one hand and MONACO INFORMATIQUES SYSTEMS, ▇.▇.▇., a
Monaco corporation ("MIS") and MONACO INFORMATIQUES SYSTEMS-USA, INC., a Nevada
corporation ("MIS-USA") (MIS and MIS- USA are hereinafter sometimes referred to
herein as "Buyers"), on the other hand, dated as of July 27, 2001 ("Asset
Purchase Agreement"), Sellers sold and Buyers purchased certain assets of MSI.
NOW, THEREFORE, the parties hereto agree as follows:
1. PLEDGE, ASSIGNMENT AND SECURITY INTEREST
Sellers hereby pledge, assign and grant a security interest to
Secured Party in each and all of the following items of collateral (hereinafter
collectively referred to as the "Collateral"):
(a) That certain promissory note dated July 27,2001, made by
Buyers to the order of Sellers as part of the purchase price under the Asset
Purchase Agreement, in the original principal sum of Seven Hundred Fifty
Thousand Dollars ($750,000) ("Note"). A copy of the Note is attached hereto and
marked Exhibit "A".
(b) All collateral securing said Note under and pursuant to the
security interest granted by Buyer to Seller pursuant to that certain Security
Agreement dated July 27, 2001 between MAI, as secured party, and MIS, as debtor
("Security Agreement"). A copy of the Security Agreement is attached hereto and
marked Exhibit "B",
(c) All payments of interest and principal due under the Note,
and all proceeds of the Note, including, but not limited to, all payments of
interest, and all accounts, instruments, chattel paper, Note, general
intangibles, inventory, goods, equipment, deposit accounts, money and whatever
other tangible and intangible property is received by the Sellers upon the
liquidation, sale, collection or other disposition of the Note or the proceeds
thereof.
(d) All right, title and interest of Sellers in that certain
interest bearing escrow account with United Title ("Escrow Agent"), ▇▇▇▇▇▇
#▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ("Escrow Account") created under and pursuant to
the Asset Purchase Agreement into which the Buyer has deposited the Purchase
Deposit (as that term is defined in the Asset Purchase Agreement) of One Million
Five Hundred Thousand Dollars ($1,500,000) and the proceeds of such Escrow
Account and the proceeds of such proceeds.
1
2. OBLIGATIONS SECURED
(a) The pledge, assignment and security interest granted herein
to the Secured Party shall secure: (1) payment and performance of the
Obligations (as defined in the Loan Agreement) of the Borrowers to Secured
Party; (2) payment and performance of any and all presently existing or
hereafter arising debts, liabilities, or obligations of the Sellers to the
Secured Party arising under this Agreement; and (3) all costs and expenses
incurred by Secured Party in the collection of any of the foregoing, including
attorneys' fees and expenses (collectively, the "Secured Obligations").
(b) In the furtherance of the pledge, assignment and security
interest granted herein Sellers agree to: (1) deliver the original of the Note
to the Secured Party; (2) endorse the Note indicating the pledge of the Note to
Secured Party; and (3) execute a notice to the Escrow Agent of the assignment of
Sellers' interest in the Escrow Account and the proceeds and distributions
thereof and therefrom in the form of the notice attached hereto and marked
Exhibit "C",
(c) So long as: (1) no Default or Event of Default has occurred
and is continuing under the Loan Agreement or Loan Documents; (2) Borrower has
not, within ten (10) days after receipt from Secured Party of written notice of
such Default or Event of Default and Secured Party's intent not to deliver to
Borrower any and all sums received by Secured Party by way of proceeds of the
Note or distributions from the Escrow Account, cured such Default or Event of
Default; and, (3) there is current availability based upon the borrowing base
formula in the Loan Agreement: Secured Party agrees to deliver to Borrower any
and all sums received by Secured Party by way of proceeds of the Note or
distributions from the Escrow Account. The availability calculation under the
borrowing base formula shall not be affected by any amounts received by Coast or
MAI from the Note or the Escrow Account.
(d) Secured Party agrees to endorse the Note back to Sellers and
to notify the Escrow Agent that Secured Party no longer has an interest in the
Escrow Account upon the Secured Obligations having been indefeasibly paid to
Coast.
3. COVENANTS, WARRANTIES, AND REPRESENTATIONS BY SELLERS
(a) The security interest of Secured Party in the Collateral
shall attach to the Collateral without further act on the part of Secured Party
or Sellers.
(b) Sellers hereby represent and warrant to Secured Party that
Sellers hold good and marketable title to the Collateral and that the Collateral
is and shall remain free from any and all security interests, liens, claims or
encumbrances other than in favor of Secured Party.
(c) Sellers have full power, authority, and legal right to pledge
all of their right, title, and interest in and to the Collateral pursuant to
this Agreement.
(d) This Agreement has been duly authorized, executed, and
delivered by Sellers and constitutes a legal, valid, and binding obligation of
Sellers enforceable in accordance with its terms, the Note has been duly
endorsed to the order of Secured Party and the notice of assignment has been
executed and delivered to the Escrow Agent.
(e) No consent of any other party (including, without limitation,
the Buyers or Sellers' creditors) and no consent, license, permit, approval, or
authorization of, exemption by, notice or report to, or registration, filing, or
declaration with, any governmental authority, domestic or foreign, is required
to be obtained by Sellers in connection with the execution, delivery, or
performance of this Agreement.
(f) Sellers hereby covenant that so long as any of the Secured
Obligations shall remain outstanding Sellers shall not assign or attempt to
assign or otherwise hypothecate the Note or their rights in the Escrow Account
or take any action that would serve to reduce or postpone their interest in
either the Note of the Escrow Account.
2
(g) Sellers hereby agree to execute and deliver to Secured Party,
concurrently with Sellers' execution of this Agreement and at any time or times
hereafter at the request of Secured Party, all financing statements,
continuation financing statements, security agreements, reports, notices with
respect to the Note, the Escrow Account, and all other documents, instruments
and agreements as Secured Party may request, in form and substance satisfactory
to Secured Party, and perform any other acts in order to perfect and maintain
perfected Secured Party's security interest in the Collateral and in order to
fully consummate all of the transactions contemplated under this Agreement.
(h) Sellers hereby grant to Secured Party an irrevocable power of
attorney, coupled with an interest, to, so long as any of the Secured
Obligations shall remain outstanding, execute, on behalf of Sellers, such
financing statements, continuation financing statements, security agreements,
reports, notices, and all other documents, instruments and agreements and
perform any other acts in order to: (i) perfect and maintain perfected security
interest in the Collateral; (ii) fully consummate all of the transactions
contemplated under this Agreement; and (iii) effect and exercise the rights and
remedies of Secured Party with respect to the Collateral as set forth in Section
4 hereof.
4. EVENTS OF DEFAULT
Sellers shall be in default hereunder if any of the following
shall occur:
(a) Sellers shall fail to endorse to Secured Party the Note as
required pursuant to the terms of this Agreement;
(b) Sellers shall fail to notify the Escrow Agent of the
assignment, pursuant to this Agreement, of Sellers' right, title and interest in
the Escrow Account and the proceeds thereof and distributions therefrom;
(c) Sellers shall fail to perform, keep, or observe any term,
provision, condition, covenant, agreement, warranty, or representation contained
in this Agreement;
(d) Any warranty, representation, promise or statement made or
furnished to Secured Party by or on behalf of Sellers was false in any material
respect when made or furnished;
(e) There shall be a levy upon, garnishment, or attachment of the
Collateral;
(f) Sellers shall become insolvent, unable to pay their debts as
they become due, make an assignment of their property for the benefit of
creditors, suffer the appointment of a receiver against any part of their
property, or any proceedings under any bankruptcy or insolvency law shall be
commenced by or against Sellers.
5. REMEDIES UPON DEFAULT
In the event of a default by Sellers under this Agreement,
Secured Party may, at its election, and without notice and without demand, do
anyone or more of the following, all of which are authorized by Sellers:
(a) Declare all of the Secured Obligations immediately due and
payable.
(b) Retain the Collateral in full satisfaction of the Secured
Obligations secured thereby.
(c) Exercise any and all other rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of
California.
3
All costs and expenses, including, without limitation, attorneys'
fees, incurred by Secured Party in connection with the enforcement and/or
exercise of any of its right or remedies herein shall be immediately payable by
Sellers, upon demand, and shall constitute Obligations hereunder, whether or not
suit is commenced. Secured Party may exercise one or more of all of the
foregoing rights and remedies. Secured Party may exercise any and all such
rights or remedies existent in its behalf in such order and priority and/or
successively, alternatively, or concurrently and in and such manner as in its
discretion may direct. All of such rights and remedies are specifically hereby
made cumulative. No delay or failure on part of the Secured Party in exercising
any right, privilege, remedy or option hereunder shall operate as a waiver of
such or any other right, privilege, remedy or option, and no waiver whatever
shall be valid unless in writing, signed by the Secured Party, and then only to
the extent therein set forth.
6. WAIVERS
6.1 Sellers absolutely, unconditionally, knowingly, and
expressly waive:
(a) (1) notice of acceptance hereof; (2) notice of any loans or
other financial accommodations made or extended under the Loan Agreement or the
Loan Documents or the creation or existence of any Secured Obligations; (3)
notice of the amount of the Secured Obligations, subject, however, to Agent's
right to make inquiry of Secured Party to ascertain the amount of the Secured
Obligations at any reasonable time; (4) notice of any adverse change in the
financial condition of Borrowers or of any other fact that might increase
Sellers' risk hereunder; (5) notice of presentment for payment, demand, protest,
and notice thereof as to any instruments among the Loan Agreement or the Loan
Documents; (6) notice of any default or Event of Default under the Loan
Agreement or the Loan Documents; and (7) all other notices (except if such
notice is specifically required to be given to Sellers hereunder or under the
Loan Agreement or the Loan Documents) and demands to which Sellers might
otherwise be entitled.
(b) their right, under Sections 2845 or 2850 of the California
Civil Code, or otherwise, to require Secured Party to institute suit against, or
to exhaust any rights and remedies which Secured Party has or may have against,
Borrowers or any third party, or against any collateral for the Secured
Obligations provided by Borrowers or any third party. In this regard, Sellers
agree that they are bound to the payment of all Secured Obligations, whether now
existing or hereafter accruing, as fully as if such Secured Obligations were
directly owing to Secured Party by Sellers. Sellers further waive any defense
arising by reason of any disability or other defense (other than the defense
that the Secured Obligations shall have been fully and finally performed and
indefeasibly paid) of Borrowers or by reason of the cessation from any cause
whatsoever of the liability of Borrowers in respect thereof.
(c) (1) any rights to assert against Secured Party any defense
(legal or equitable), set-off, counterclaim, or claim which Sellers may now or
at any time hereafter have against Borrowers or any other party liable to
Secured Party; (2) any defense, set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Secured Obligations
or any security therefor; (3) any defense Sellers have to performance hereunder,
and any right Sellers have to be exonerated, provided by Sections 2819, 2822, or
2825 of the California Civil Code, or otherwise, arising by reason of the
impairment or suspension of Secured Party's rights or remedies against Borrower;
the alteration by Secured Party of the Secured Obligations; any discharge of
Borrowers' obligations to Secured Party by operation of law as a result of
Secured Party's intervention or omission; or the acceptance by Secured Party of
anything in partial satisfaction of the Secured Obligations; (4) the benefit of
any statute of limitations affecting Sellers' liability hereunder or the
enforcement thereof; and any act which shall defer or delay the operation of any
statute of limitations applicable to the Secured Obligations shall similarly
operate to defer or delay the operation of such statute of limitations
applicable to Sellers' liability hereunder.
6.2 Sellers hereby absolutely, unconditionally, knowingly, and
expressly waive: (1) any right of subrogation Sellers have or may have as
against Borrowers with respect to the Secured Obligations; (2) any right to
proceed against Borrowers or any other person or entity, now or hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and
claims, whether direct or
4
indirect, liquidated or contingent, whether arising under express or implied
contract or by operation of law, which Sellers may now have or hereafter have as
against Borrowers with respect to the Secured Obligations; and (3) any right to
proceed or seek recourse against or with respect to any property or asset of
Borrowers.
6.3 WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, SELLERS HEREBY ABSOLUTELY, KNOWINGLY,
UNCONDITIONALLY, AND EXPRESSLY WAIVE AND AGREE NOT TO ASSERT ANY AND ALL
BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821,
2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 580a, 580b, 580c, 580d, AND 726, CALIFORNIA UNIFORM COMMERCIAL CODE
SECTIONS 3116, 3118, 3119,3419,3605,9504 AND 9507, AND CHAPTER 2 OF TITLE 14 OF
PART 4 OF DIVISION 3 OF THE CALIFORNIA CIVIL CODE.
7. RELEASES
Sellers consent and agree that, without notice to or by Sellers,
and without affecting or impairing the obligations of Sellers hereunder, Secured
Party may, by action or inaction:
7.1 compromise, settle, extend the duration or the time for the
payment of; or discharge the performance of; or may refuse to or otherwise not
enforce this Agreement, the Loan Agreement or the Loan Documents, or any part
thereof; with respect to Borrowers or any other Person;
7.2 release Borrowers or any other Person or grant other
indulgences to Borrowers or any other Person in respect thereof;
7.3 amend or modify in any manner and at any time (or from time
to time) any of the Loan Agreement or the Loan Documents; or
7.4 release or substitute any guarantor, if any, of the Secured
Obligations, or enforce, exchange, release, or waive any security for the
Secured Obligations or any guaranty of the Secured Obligations, or any portion
thereof
8. MISCELLANEOUS PROVISIONS
8.1 This Agreement shall be construed and enforced according to
the laws of the State of California.
8.2 If any clause, provision, or right provided for herein is
unenforceable or inoperative, the remainder of this Agreement may be enforced as
if such clause, provision or right were not contained herein.
8.3 This Agreement cannot be changed or terminated orally.
8.4 All capitalized terms not defined herein shall have the
meaning ascribed to them in the Loan Agreement.
8.5 All the rights, privileges, remedies and options given to the
Secured Party hereunder shall inure to the benefit of its successors and assigns
and all the terms, conditions, promises, covenants, provisions, and warranties
of this Agreement shall bind the representatives, successors, and assigns of
each of the parties. Sellers may not assign this Agreement without the Secured
Party's prior written consent, and any prohibited assignment shall be absolutely
null and void. No consent to an assignment by Secured Party shall release the
Sellers of its obligations to Secured Party. Secured Party may fully assign this
Agreement and its rights and duties hereunder.
5
8.6 All notices, demands and other communications to Sellers
shall be directed to the address set forth below. Unless otherwise provided
herein, all notices or demands by Agent or Secured Party relating to this
Agreement shall be in writing and sent by regular United States mail, postage
prepaid, or by telecopy, telefax or personal delivery, and shall be deemed
received upon the earlier of actual receipt or the date three (3) days following
transmission. Such notices and demands shall be directed to the following
addresses:
IF TO Sellers: MAI Systems International
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
MAI Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
MAI Development Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
IF to Secured Party: Coast business Credit
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
With a Copy to: Buchalter, Nemer, Fields & Younger, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ 900 17-5704
Attn: ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as the parties may direct pursuant to the terms hereof.
6
8.7 SELLERS AND SECURED PARTY HEREBY EACH WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING
OUT OF SECURED PARTY"S TRANSACTIONS WITH SELLERS OR BORROWERS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first hereinabove set forth.
"SELLERS"
MAI SYSTEMS INTERNATIONAL,
a Nevada corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Secretary
-------------------------------------
(Name and title)
MAI SYSTEMS CORPORATION,
a Delaware corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ CFO & COO
-------------------------------------
(Name and title)
MAI DEVELOPMENT CORPORATION,
a Nevada corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Secretary
-------------------------------------
(Name and title)
"SECURED PARTY"
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
By /s/ [Signature Illegible]
-------------------------------------
Title [Illegible]
7
LIST OF EXHIBITS
TO
PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT
Exhibit "A"...............................................NOTE
Exhibit "B"...............................................Security Agreement
Exhibit "C"...............................................Notice to Escrow Agent
8
NOTICE TO ESCROW AGENT
To United Title
Las Vegas, Nevada
Re Escrow # 01119541
NOTICE IS HEREBY GIVEN: that the interest of the undersigned in the above
referred to escrow account and all the rights, proceeds and distributions
flowing therefrom (the "Escrow Account") have been assigned transferred and
conveyed to Coast Business Credit, a division of Southern Pacific Bank, a
California corporation ("Coast"). All proceeds and distributions of the
undersigned from the Escrow Account shall be delivered solely to Coast unless
and until you are notified, in writing, by Coast that it no longer has an
interest in the Escrow Account. Distributions of the funds held in the Escrow
Account, payable to the undersigned from the Escrow Account, shall be made
solely to and for the account of Coast by wire transfer to the following
account:
Bank Name: ▇▇▇▇▇ Fargo Bank
Location: San Francisco, California
ABA Routing No. #121 000 284
Account Name: MAI Systems Corporation
Account No.: 41593-43763
Dated: September 7. 2001
MAI SYSTEMS INTERNATIONAL,
a Nevada corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Secretary
-------------------------------------
(Name and title)
MAI SYSTEMS CORPORATION,
a Delaware corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ CFO & COO
-------------------------------------
(Name and title)
MAI DEVELOPMENT CORPORATION,
a Nevada corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Secretary
-------------------------------------
(Name and title)
Exhibit A
