Exhibit 99.5
SETTLEMENT AGREEMENT
The parties ("Parties") to this Settlement Agreement ("Agreement"),
dated August 13, 2002, are BounceBackTechnologies.com, Inc., f/k/a Casino
Resource Corporation ("BounceBack"), John J. Pilger ("Pilger"), Willard E. Smith
("Smith"), and Monarch Casinos, Inc. ("Monarch").
WHEREAS, BounceBack commenced an action against Smith and Monarch,
venued in Jackson County, Mississippi, Case No. 98-0416(2) ("Action"); and,
WHEREAS, Smith and Monarch filed a Counterclaim against BounceBack and
a Third-Party Complaint against Pilger in the Action; and,
WHEREAS, BounceBack and Pilger may be insured for certain claims set
forth in the Action; and,
WHEREAS, Pilger and Pilger are concerned about their potentially
uninsured exposure to Smith and Monarch on their claims contained in the Action;
and,
WHEREAS, BounceBack and Pilger are concerned about their potentially
uninsured exposure to Smith and Monarch on certain claims contained in the
Action; and,
WHEREAS, the Parties desire to resolve the disputes between themselves
without having to incur additional legal expenses and without any admissions of
liability.
NOW THEREFORE, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I.
SETTLEMENT: THAT BounceBack and Pilger, without admitting any liability or
wrongdoing, agree to pay Smith and Monarch the aggregate amount of up to Two
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Million Dollars ($2,000,000). The Settlement shall be secured by a written
assignment (the "Assignment") from BounceBack to Smith and Monarch of an
aggregate of $1,000,000 of the prospective proceeds payable to BounceBack
pursuant to the Conditional Release and Termination Agreement of May 20, 1999
between BounceBack and Lakes Gaming, Inc., as amended, a copy of which is
attached hereto as Exhibit "A". The Assignment shall be in the form attached
hereto as Exhibit "B". The maximum of $1,000,000 payable pursuant to the
Assignment shall be payable in accordance with the provisions of Article IV
below. Said Settlement shall be further secured by a written assignment of up to
$1,000,000 after litigation expenses, of the proceeds of any insurance that may
become payable to BounceBack or Pilger under any policy of insurance covering
the claims set forth in the Action. BounceBack and Pilger agree to execute the
Insurance Assignment attached hereto as Exhibit "C" and shall prepare and
execute such additional Insurance Assignments as may be applicable.
ARTICLE II.
INDEMNIFICATION OF BOUNCEBACK: THAT subject to, and without prejudicing,
Pilger's rights and claims against any insurance carrier, pursuant to
BounceBack's Articles of Incorporation and By-Laws and Minnesota law, BounceBack
agrees to indemnify Pilger for all payments due under Article I above and all
costs and expenses incurred with respect to the Action and this Settlement
Agreement.
ARTICLE III.
ASSIGNMENT OF RIGHTS TO BOUNCEBACK: THAT Pilger agrees to assign to BounceBack
all of his rights and claims against any insurance carrier with regard to
Smith's and Monarch's claims against him, including specifically, the right to
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any money recovered from any such carrier with regard to its obligation to pay
the Settlement.
ARTICLE IV.
PAYMENT OF AMOUNTS DUE PURSUANT TO ARTICLE I ABOVE: THAT Smith and Monarch agree
that, subject to the provisions of Article XIX below, the Settlement may only be
satisfied from two sources, to-wit:
a) Funds that are paid by Lakes Gaming, Inc. ("Lakes") to BounceBack, or become
due under the Conditional Release and Termination Agreement between Lakes and
BounceBack, dated May 20,1999 (a copy of which is attached as Exhibit "A"), as
amended by the Amendment to Conditional Release and Termination Agreement, dated
July 1, 1999 (a copy of which is attached as Exhibit "D"). The satisfaction
under this subparagraph (a) shall be limited to an aggregate of $1,000,000 and
shall be by payments of a maximum of $200,000 per year, to be paid quarterly in
arrears. In the event that Lakes exercises its right under Paragraph 5.6 of the
Amended Conditional Release and Termination Agreement, any unpaid balance of
said $1,000,000 due to Smith/Monarch by BounceBack shall be paid immediately,
subject to the 10% discount conveyed to BounceBack under said Paragraph 5.6. If
Lakes prepays only a portion of the amount due, the amount payable to
Smith/Monarch, subject to the 10% discount, shall be prorated.
b) The first $1,000,000, after litigation expenses, recovered by
Pilger/BounceBack from any insurance carrier providing coverage of claims under
the Action shall be paid by BounceBack/Pilger promptly after the receipt
thereof.
Partial satisfaction of the Settlement from one of the sources set out
in
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subparagraphs (a) and (b) above shall not preclude further satisfaction from the
other, subject to the limitations of $1,000,000 from each source as set out in
subparagraphs (a) and (b) above.
It is expressly understood and agreed that the events described above
in this Article IV are contingent, and that there exists a risk that neither
event will occur. If for any reason the events do not occur, then Smith and
Monarch will not be entitled to any portion of the Settlement, subject however,
to the provisions of Article XIX. Neither BounceBack nor Pilger shall be
obligated to pursue the claim against any insurance carrier if, in their sole
discretion, they conclude that the claim lacks sufficient merit to warrant
continued pursuit.
ARTICLE V.
LIMITATION ON EXECUTION: THAT Smith and Monarch agree that they will not have
the right to execute upon, or collect, any assets from Pilger and/or BounceBack
to satisfy the Settlement, except for those assets which may be derived out of
the events described above in Article IV, subject however, to the provisions of
Article XIX.
ARTICLE VI.
REAL PROPERTY: BounceBack shall contemporaneously with the execution of this
Agreement, convey by quitclaim deed, any interest it may have in the real
property at 303 LaSalle Court, and Lots 5 & 6, Seapointe Subdivision, Ocean
Springs, Mississippi, less the waterfront portions thereof, to Nancy A. Smith,
who shall be a third party beneficiary. The quitclaim deed shall be
substantially in the form set out in Exhibit "E". The property shall be conveyed
free and clear of unpaid taxes and
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other encumbrance liens, except for the mortgage loan from Bancorp South and
associated Deed of Trust, and any back taxes associated with Lot 7 (303 LaSalle
Court). BounceBack agrees to execute a standard title insurance Owners/Sellers
Affidavit in the form attached as Exhibit "F", which is to be used for title
insurance purposes only. Pilger shall grant unto Smith and his wife, Nancy A.
Smith, a personal license for waterborne ingress and egress over that portion of
Lot 5, Seapointe Subdivision which shall not be transferrable, which is not
being conveyed to Nancy A. Smith pursuant to the terms of this paragraph, in the
form set out in Exhibit "G".
ARTICLE VII.
MUTUAL RELEASES/TERMINATION OF ACTION:
(a) THAT other than the obligations created by this Agreement, Smith
and Monarch and its officers, directors, and agents (present or
former)(including without limitation its corporate representatives with regard
to the action, Phil Hanson) on one hand, and Pilger and BounceBack and its
officers, directors, and agents (present and former) on the other hand, hereby
remise, release and forever discharge each the other, and jointly and severally
agree to indemnify, defend and hold harmless each other, from and against any
and all claims, demands, actions, causes of actions, suits, controversies,
judgments and liabilities, of any nature whatsoever, in law, equity or
otherwise, and whether asserted or unasserted, known or unknown, disclosed or
undisclosed, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due, which either party or its
officers, directors or agents (present or former) may have against the other
party or its offices, directors or agents (present or former), arising out of,
directly or indirectly, any act or omission occurring on or prior to the date
hereof.
(b) It is agreed that the Action will be dismissed by stipulation
pursuant to Rule 41, Mississippi Rules of Civil Procedure, in the form set out
as Exhibit "H".
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ARTICLE VIII.
PRESERVATION OF RIGHTS: THAT the Parties agree that nothing in this Agreement
shall operate to prejudice any of or BounceBack's or Pilger's rights or claims
against any insurance carrier; all such rights and claims are expressly
preserved.
ARTICLE IX.
AGREEMENT: THAT the Parties acknowledge that this Agreement:
a) was the product of joint negotiation and drafting;
b) is integrated;
c) may not be modified unless done so in a writing signed by all Parties; and,
d) is to be constructed under Mississippi law.
ARTICLE X.
SEVERANCE: THAT the Parties agree that, in the event that any provision of this
Agreement is held invalid or unenforceable, then the balance of the Agreement
shall be severable and enforceable.
ARTICLE XI.
ADVICE OF COUNSEL: THAT the Parties acknowledge that they have obtained
independent legal advice about the wisdom and consequences of entering into this
Agreement and that they are not entering into this Agreement based on any
representation, promise or warranty made by any other party except as expressly
set forth herein.
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ARTICLE XII.
ADDITIONAL DOCUMENTS: THAT the Parties agree to execute such further or
additional documents, if any, as are reasonably necessary to carry out the
intent of this Agreement.
ARTICLE XIII.
BINDING AGREEMENT: THAT the Parties acknowledge that this Agreement is binding
upon and inures to the benefit of the Parties and their past, present, and
future officers, directors, employees, agents, affiliates, successors and
assigns.
ARTICLE XIV.
AUTHORITY: THAT the individuals signing this Agreement represent and warrant
that they have the actual authority to bind the party on whose behalf they are
signing this Agreement, that such party has the full legal authority to enter
into this Agreement, and that none of the rights or claims that are the subject
of this Agreement have been transferred, sold or assigned to any other person,
firm or entity.
ARTICLE XV.
ARBITRATION: THAT the Parties agree that, if there is any dispute about the
formation, enforceability, performance, or alleged breach of this Agreement,
then such dispute shall be settled by binding arbitration in accordance with the
AAA Commercial Arbitration Rules in effect as of the date of this Agreement. The
prevailing party in any such dispute shall be awarded its attorney's fees and
costs.
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ARTICLE XVI.
CONFIDENTIALITY: THAT the Parties agree that this Agreement and the terms
thereof shall be treated as confidential (i.e., not disclosed to any third party
in the absence of a court order or legal necessity) and shall not be admissible
or utilized for any purpose other than enforcing its terms or pursuing a claim
against any insurance carrier; provided however, that the exhibits thereto may
be used for the intended purposes. Smith/Monarch acknowledge that BounceBack
will file this Settlement Agreement and all Exhibits attached hereto with the
Securities and Exchange Commission.
ARTICLE XVII.
CAPTIONS: Captions and Article headings contained in this Agreement are for
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement, nor the intent of any provision hereof.
ARTICLE XVIII.
REPRESENTATIONS OF PILGER AND BOUNCEBACK: Pilger and BounceBack represent and
warrant as follows:
1) that Pilger was insured by Lloyds for directors and officers liability
coverage under Certificate No. DOM3001376.
2) that the Conditional Release and Termination Agreement between BounceBack and
Lakes Gaming (Lakes), dated May 20, 1999, as amended by the Amended Conditional
Release and Termination Agreement, dated July 1, 1999, remains in force and
effect, there are no further amendments thereto, said agreement is fully
executory except for the advance of the sum of $2,000,000 paid to BounceBack by
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Lakes on or about August 15, 1999, that said agreement is not subject to any
pledges to third parties, discounts to Lakes not disclosed in Exhibits "A" or
"D", is not subject to any liens or charges of any nature, and there exist no
restrictions upon assignment of said agreement; provided however, that
BounceBack may, in the future, assign a portion of the funds due under it to the
third-parties, or negotiate early payment of a portion of the funds due under
said agreement so long as the obligation to Smith/Monarch is not impaired. For
the purposes of this paragraph "impairment" shall mean and be construed as
causing the maximum $1,000,000 payment to Smith/Monarch set out in Article IV(a)
above, to be less than $200,000 per year, paid quarterly in arrears.
The representations and warranties made in this paragraph run to the
essence of and the source of the consideration promised by BounceBack and
Pilger, and serve as a material inducement for Smith and Monarch to enter into
this agreement. Any substantial inaccuracy in these representations and
warranties shall be a material breach of this agreement, and shall vitiate all
rights and obligations hereunder.
ARTICLE XIX.
MATERIAL BREACH: In the event that Pilger and/or BounceBack commit a material
breach of this Agreement via act or omission, Smith and/or Monarch may at their
sole discretion elect to either: 1) submit the matter for arbitration pursuant
to Article XV above; or, 2) apply to the Court to set aside the Settlement and
resume litigation (after giving effect or credit for any prior payments).
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ARTICLE XX.
COUNTERPARTS: This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same Agreement; and facsimile copies shall be considered originals when
an executed copy is transmitted to another party.
BounceBackTechnologies.com, Inc.
DATED:August 13, 2002 BY: /s/ John J. Pilger
John J. Pilger, Individually
BounceBackTechnologies.com
DATED:August 13, 2002 BY: /s/ John J. Pilger
John J. Pilger, President
DATED:August 10, 2002 BY: /s/ Willard E. (Bud) Smith
Willard E. (Bud) Smith, Individually
Monarch Casinos, Inc.
DATED: August 10, 2002 BY: /s/ Phil Hanson
Phil Hanson, Representative
DATED: August 10, 2002 BY: /s/ Kent Williams, President
Kent Williams, President
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LIST OF EXHIBITS
A. Conditional Release and Termination Agreement of May 20,1999
B. Assignment
C. Insurance Assignment
D. Amendment to Conditional Release and Termination Agreement dated July 1,1999
E. Quit Claim Deed
F. Title Insurance Seller/Owners Affidavit
G. Personal license for waterborne ingress and egress
H. Stipulation of Dismissal
[Exhibits Intentionally Omitted]
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