Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-00907/USCOURTS-caed-2_13-cv-00907-40/pdf.json

Nature of Suit Code: 150
Nature of Suit: Overpayments &amp; Enforcement of Judgments
Cause of Action: 28:1332 Diversity-Contract Dispute

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GILBERT J. PREMO (Bar No. 48503)

Attorney at Law 

500 Northfield Lane 

Lincoln, CA 95648-8321 

Telephone: (415) 974-6664 

Facsimile: (415) 762-5350 

gilbertpremo@gmail.com

Attorney for Plaintiff and Counter-Defendant 

KEITH R. CLAYTON 

DONAHUE DAVIES LLP 

JAMES R. DONAHUE (Bar No. 105106) 

REBEKAH MORRISSEY (Bar No. 287379) 

P.O. Box 277010 

Sacramento CA 95827 

Telephone: (209) 817 2900 

Facsimile: (916) 817-2644 

JDonahue@donahuedavies.com 

RMorrissey@donahuedavies.com 

Attorneys for Defendant and Counter-Claimant 

AUTOMATED GAMING TECHNOLOGIES, INC. 

and Defendants John Prather and Robert Magnanti 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

KEITH R. CLAYTON, 

Plaintiff, 

v. 

AUTOMATED GAMING 

TECHNOLOGIES, INC., a Nevada 

corporation, et al. 

Defendants. 

__________________________________ 

AND RELATED COUNTERCLAIM

Case No. 2:13-cv-00907-JAM-EFB 

ORDER OF DISMISSAL PURSUANT TO 

SETTLEMENT AGREEMENT 

 

The parties hereto, to wit plaintiff and counter-defendant Keith R. Clayton (plaintiff or 

"Clayton"), and defendant and counterclaimant Automated Gaming Technologies, Inc. ("AGT") 

and defendants John Prather ("Prather") and Robert Magnanti ("Magnanti"), having entered into a 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 1 of 22
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1394872.1 2

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

written agreement for settlement of this action ("Settlement Agreement"), a copy of which is 

attached hereto as "EXHIBIT 1" and incorporated as reference herein, and the parties having filed 

a Joint Application for entry of this accordant Order, IT IS HEREBY ORDERED AS 

FOLLOWS: 

A. The parties shall comply with the terms of the Settlement Agreement attached hereto 

as "EXHIBIT 1", which is hereby incorporated by reference as if fully set forth herein. Without 

limitation: 

1. Payment of $200,000. AGT shall pay to Clayton the sum of TWO HUNDRED 

THOUSAND DOLLARS ($200,000.00), which shall be paid to Clayton in installments as 

follows: 

a. AGT shall pay Clayton the sum of SEVEN THOUSAND FIVE HUNDRED 

DOLLARS ($7,500.00) within thirty (30) days of the signing of this Agreement; 

b. AGT shall pay Clayton the additional sum of SEVEN THOUSAND FIVE 

HUNDRED DOLLARS ($7,500.00) within sixty (60) days of the signing of this Agreement; 

c. AGT shall pay to Clayton the remaining balance of ONE HUNDRED EIGHTY-FIVE 

THOUSAND DOLLARS ($185,000.00) in installments of FIVE THOUSAND DOLLARS 

($5,000) per month, for a period of thirty-seven (37) consecutive months, each installment being 

due on the first day of each calendar month hereafter, starting on the first day of the first calendar 

month that is over eighty (80) days from the signing of the Agreement, and continuing on the first 

day of each calendar month thereafter until the entire remaining unpaid balance of the originally 

agreed sum of $200,000.00 shall have been paid to Clayton; 

provided, however, that if any such installment is not paid within ten (10) days of its due date, 

and said default continues for ten (10) days after written notice of such default is given to AGT, 

the entire remaining unpaid balance of the originally agreed sum of $200,000.00 shall become 

immediately due and payable by AGT to Clayton, without further demand or notice. Interest shall 

accrue at the legal rate on the unpaid balance of the principal sum or any installments only from 

the date that payment is due. In the event of any such default in payment which has continued for 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 2 of 22
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1394872.1 3

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

ten (10) or more days after such written notice of default, Clayton may apply to the Court in the 

Federal Court Action or the federal court in such district, by motion, or by ex-parte application, 

upon seven (7) days written notice to AGT and/or its then attorneys of record, if any, for entry of 

a order against AGT that it immediately pay to Clayton the entire remaining unpaid balance of the 

originally agreed sum of $200,000.00,.interest on past due balances, and reasonable attorney fees 

incurred in obtaining the said order. John Prather and Robert Magnanti are not hereby agreeing to 

make payments required of AGT hereunder as a personal liability of either Prather or Magnanti, 

but this is not intended and should not construed to in any way negate their fiduciary duties as 

corporate officers of AGT toward Clayton as a creditor of AGT. 

2. Royalties on CBMS. AGT shall also pay to Clayton ten percent (10%) of all 

gross revenues from future sales or licensing by AGT of the Currency Banking Management 

System (“CBMS”) software, or derivatives thereof (provided, however, that "derivatives" this 

shall not include the “Horizon” software), including: 

a. New sales or licensing of CBMS to existing CBMS customers, if any; 

b. New sales or licensing of CBMS to new CBMS customers, if any; 

c. Upgrades of or for new versions of the CBMS for which AGT charges the 

CBMS customer, if any; and 

d. A sale or assignment, if any, of the CBMS program or any copyright therein. 

Gross revenues for the purposes of the above royalty calculation shall not include charges for 

annual software maintenance which do not include charges for providing new or upgraded 

versions of the CBMS. If AGT bundles the charge for providing a new or upgraded version of 

the CBMS into an annual software maintenance charge, Clayton shall be entitled to his abovepercentage of the gross revenue therefrom, as applied to that portion of the total charge that 

represents AGT's charge for providing the new or upgraded version. AGT shall provide quarterly 

reports to Clayton of such sales or licensing, if any, for which Clayton is entitled to payment 

hereunder, and pay over Clayton's share within fifteen (15) days of the end of each quarter in 

which AGT receives revenues as to which Clayton is entitled to such share hereunder. As used 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 3 of 22
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1394872.1 4

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

herein, the "Horizon" software includes only a "Windows" based WPF (Windows Presentation 

Foundation) application. "Derivatives" of the CBMS include, among other things, any "webbased" application that is based upon the Administrative Application copyrighted by Clayton or 

which is based upon or utilizes any source code written by Clayton for the CBMS. 

3. Source Code of CBMS. Clayton will deliver to AGT, within fifteen (15) days 

after Clayton receives the second installment payment of $7,500.00 required under paragraph “1" 

above (so that total payments at that point equal at least $15,000.00), a copy of the source code in 

his possession for that version of the CBMS software written by Clayton which was the last 

version he delivered to AGT, as well as the source code of the work-in-process version 3.0 of the 

CBMS. All such source code shall be delivered without any warranty, express or implied, 

whatsoever by Clayton, and in its "AS IS" condition. Any warranty of merchantability and any 

warranty of fitness for a particular purpose is expressly disclaimed. 

4. Copyright in Administrative Application. Clayton shall retain all copyright and 

ownership rights in the “Administrative Application” software written by Clayton, including but 

not limited to the “KC Administrative Application” for which a copyright was issued on July 20, 

2013. Clayton hereby grants to AGT a perpetual, non-exclusive, royalty-free, license, to use the 

Administrative Application in AGT’s possession, without any additional charge, so long as AGT 

is not in default under this Agreement. Clayton shall not, for a period of two (2) years after the 

signing of this Agreement compete with AGT, by using the Admin App in a competing employee 

banking application. 

 B. The Court retains and reserves jurisdiction to enforce the Settlement Agreement and 

this accordant Order; 

C. Subject to the provisions of paragraphs A and B above, this action, including 

plaintiff’s complaint against AGT, Prather, and Magnanti, and AGT’s counterclaim against 

plaintiff, is dismissed with prejudice, , each party to bear its own attorney fees and costs 

heretofore incurred. 

// 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 4 of 22
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[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

D. The foregoing dismissals are voluntary, and shall not operate as an adjudication on 

the merits under Rule 41 of the Federal Rules of Civil Procedure. 

IT IS SO ORDERED: 

Dated: 10/14/2015 

 __ /s/ John A. Mendez____________ 

 JOHN A. MENDEZ 

 United States District Court Judge 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 5 of 22
 EXHIBIT 1 

 to Order 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 6 of 22
 Settlement Agreement, Page 1 

SETTLEMENT AGREEMENT 

 This SETTLEMENT AGREEMENT ("this Agreement”), dated for reference purposes 

October 2, 2015, is made and entered by and between the following parties (“Parties”) hereto: 

 Keith R. Clayton (“Clayton”), on the one hand; and 

Automated Gaming Technologies, Inc., a Nevada corporation, (“AGT”), John B. 

Prather (“Prather”), and Robert Magnanti (“Magnanti”), on the other hand; 

with reference to the following facts (any description or summary in this preface of the written 

pleadings, filings, claims or defenses of any person is for purposes of reference, and is not intended 

to supersede the actual text thereof): 

A. On March 28, 2013, Clayton filed a complaint in the Superior Court of the State of 

California, in and for the County of Placer, entitled Keith R. Clayton, Plaintiff, vs. Automated 

Gaming Technologies, Inc., a Nevada corporation, and DOE 1 through DOE 50, inclusive, 

Defendants, Case No. SCV0032766 (“the State Court Action”), and on March 29, 2013 filed a 

similarly entitled First Amended Complaint therein; 

B. On May 8, 2013, AGT removed the State Court Action to the United States District Court 

in and for the Eastern District of California, Sacramento Division, and it there became Case No. 

2:13-CV-00907-JAM-EFB (the “Federal Court Action”). On November 27, 2013, Clayton filed his 

“Third Amended Complaint” therein against AGT, Prather and Magnanti, entitled Keith R. Clayton, 

Plaintiff, vs. Automated Gaming Technologies, Inc., a Nevada corporation, John R. Prather [sic] 

and Robert Magnanti, Defendants. The reference to “John B. Prather” was in error, and the intended 

reference was to Prather. On May 8, 2014, AGT filed its “Second Amended Counterclaims” therein 

against Clayton, entitled Automated Gaming Technologies, Inc., a Nevada Corporation, CounterClaimant, v. Keith R. Clayton, and Does 1 Through 10, Inclusive, Counter-Defendants. Said Third 

Amended Complaint and said Second Amended Counterclaims are the currently operative 

affirmative pleadings in the Federal Count Action. Each Party filed answers to said complaints or 

counterclaims, denying the material allegations therein and alleging various affirmative defenses. 

C. On September 17, 2015, a mediation was held between the parties to resolve the foregoing 

disputes, and a handwritten settlement agreement was then entered into between and signed by the 

Parties, which contemplated a formal settlement agreement embodying the terms thereof. This 

Agreement is that formal settlement agreement, and supersedes and completely replaces the 

handwritten settlement agreement. 

 NOW THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL 

COVENANTS AND CONDITIONS OF THIS AGREEMENT, IT IS HEREBY AGREED AS 

FOLLOWS: 

1. Payment of $200,000. AGT shall pay to Clayton the sum of TWO HUNDRED 

THOUSAND DOLLARS ($200,000.00), which shall be paid to Clayton in installments as follows: 

a. AGT shall pay Clayton the sum of SEVEN THOUSAND FIVE HUNDRED 

DOLLARS ($7,500.00) within thirty (30) days of the signing of this Agreement; 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 7 of 22
 Settlement Agreement, Page 2 

b. AGT shall pay Clayton the additional sum of SEVEN THOUSAND FIVE 

HUNDRED DOLLARS ($7,500.00) within sixty (60) days of the signing of this 

Agreement; 

c. AGT shall pay to Clayton the remaining balance of ONE HUNDRED EIGHTYFIVE THOUSAND DOLLARS ($185,000.00) in installments of FIVE THOUSAND 

DOLLARS ($5,000) per month, for a period of thirty-seven (37) consecutive months, 

each installment being due on the first day of each calendar month hereafter, starting 

on the first day of the first calendar month that is over eighty (80) days from the 

signing of this Agreement, and continuing on the first day of each calendar month 

thereafter until the entire remaining unpaid balance of the originally agreed sum of 

$200,000.00 shall have been paid to Clayton; 

provided, however, that if any such installment is not paid within ten (10) days of its due date, and 

said default continues for ten (10) days after written notice of such default is given to AGT, the 

entire remaining unpaid balance of the originally agreed sum of $200,000.00 shall become 

immediately due and payable by AGT to Clayton, without further demand or notice. Interest shall 

accrue at the legal rate on the unpaid balance of the principal sum or any installments only from the 

date that payment is due. In the event of any such default in payment which has continued for ten 

(10) or more days after such written notice of default, Clayton may apply to the Court in the Federal 

Court Action or the federal court in such district, by motion, or by ex-parte application, upon seven 

(7) days written notice to AGT and/or its then attorneys of record, if any, for entry of a order against 

AGT that it immediately pay to Clayton the entire remaining unpaid balance of the originally agreed 

sum of $200,000.00,.interest on past due balances, and reasonable attorney fees incurred in obtaining 

the said order.John Prather and Robert Magnanti are not hereby agreeing to make payments required 

of AGT hereunder as a personal liability of either Prather or Magnanti, but this is not intended and 

should not construed to in any way negate their fiduciary duties as corporate officers of AGT toward 

Clayton as a creditor of AGT. 

2. Royalties on CBMS. AGT shall also pay to Clayton ten percent (10%) of all gross 

revenues from future sales or licensing by AGT of the Currency Banking Management System 

(“CBMS”) software, or derivatives thereof (provided, however, that "derivatives" this shall not 

include the “Horizon” software), including: 

a. New sales or licensing of CBMS to existing CBMS customers, if any; 

b. New sales or licensing of CBMS to new CBMS customers, if any; 

c. Upgrades of or for new versions of the CBMS for which AGT charges the CBMS 

customer, if any; and 

d. A sale or assignment, if any, of the CBMS program or any copyright therein. 

Gross revenues for the purposes of the above royalty calculation shall not include charges for annual 

software maintenance which do not include charges for providing new or upgraded versions of the 

CBMS. If AGT bundles the charge for providing a new or upgraded version of the CBMS into an 

annual software maintenance charge, Clayton shall be entitled to his above-percentage of the gross 

revenue therefrom, as applied to that portion of the total charge that represents AGT's charge for 

providing the new or upgraded version. AGT shall provide quarterly reports to Clayton of such sales 

or licensing, if any, for which Clayton is entitled to payment hereunder, and pay over Clayton's share 

 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 8 of 22
 Settlement Agreement, Page 3 

within fifteen (15) days of the end of each quarter in which AGT receives revenues as to which 

Clayton is entitled to such share hereunder. As used herein, the "Horizon" software includes only a 

"Windows" based WPF (Windows Presentation Foundation) application. "Derivatives" of the CBMS 

include, among other things, any "web-based" application that is based upon the Administrative 

Application copyrighted by Clayton or which is based upon or utilizes any source code written by 

Clayton for the CBMS. 

3. Source Code of CBMS. Clayton will deliver to AGT, within fifteen (15) days after Clayton 

receives the second installment payment of $7,500.00 required under paragraph “1" above (so that 

total payments at that point equal at least $15,000.00), a copy of the source code in his possession 

for that version of the CBMS software written by Clayton which was the last version he delivered to 

AGT, as well as the source code of the work-in-process version 3.0 of the CBMS. All such source 

code shall be delivered without any warranty, express or implied, whatsoever by Clayton, and in its 

"AS IS" condition. Any warranty of merchantability and any warranty of fitness for a particular 

purpose is expressly disclaimed. 

4. Copyright in Administrative Application. Clayton shall retain all copyright and ownership 

rights in the “Administrative Application” software written by Clayton, including but not limited to 

the “KC Administrative Application” for which a copyright was issued on July 20, 2013. Clayton 

hereby grants to AGT a perpetual, non-exclusive, royalty-free, license, to use the Administrative 

Application in AGT’s possession, without any additional charge, so long as AGT is not in default 

under this Agreement. Clayton shall not, for a period of two (2) years after the signing of this 

Agreement compete with AGT , by using the Admin App in a competing employee banking 

application. 

5. Notices to AGT. Any notices to AGT, Prather or Magnanti required under this Agreement, 

including but not limited to notices of defaults in payments, may be sent or delivered by email, 

facsimile transmission, United States mail, overnight courier, or personal delivery, to the following 

address(es) or facsimile numbers, or such other addresses or numbers as such parties may provide by 

prior written notice to Clayton: 

If to Automated Gaming Technologies, Inc.: 

Automated Gaming Technologies, Inc. 

Attn: Robert Magnanti 

6845 South Escondido St., Ste 104 

Las Vegas, NV 89119 

email: rmagnanti@agtworldwide.com

facsimile: (702) 685-9261 

If to Magnanti: Addressed to Magnanti at AGT's above address, facsimile number and/or email; 

If to Prather: Addressed to Prather at AGT's above address or facsimile number, and/or Prather's 

email of jprather@agtworldwide.com; 

and, in each above case, with a copy to: 

mailto:jdonahue@donahuedavies.comJames R. Donahue, Esq. 

Donahue Davies LLP 

Post Office Box 277010 

 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 9 of 22
 Settlement Agreement, Page 4 

Sacramento, CA 95827-7010, facsimile : (916) 817-2644. email: jdonahue@donahuedavies.com; 

[For courier or personal delivery: 1 Natoma St, Folsom, CA] 

 Notices sent by mail shall be effective three (3) calendar days after placing in the United 

States Mail. Notices sent by email or facsimile transmission by 5:00 p.m. on a weekday (other than a 

Court holiday) shall be deemed effective when sent, otherwise notices so sent after 5:00 p.m, or on 

Saturday, Sunday or Court holiday shall be deemed effective the next business day. Notices sent by 

personal delivery shall be effective when received. 

 The source code above provided to be delivered to AGT shall be delivered to a 3rd Party 

repository which AGT will authorize. AGT will provide the appropriate location to send the source 

code within 60 days after execution of this Agreement 

6. Payments and Notices to Clayton. Any payments to Clayton required under this 

Agreement, or reports required to be given under this Agreement shall be sent or delivered to: 

 Gilbert J. Premo, Esq. 

 500 Northfield Lane 

 Lincoln, CA 95648-8321 

and the payment instruments shall be payable to “Keith R. Clayton and Gilbert J. Premo”. Clayton 

may change the address and to whom the payments instruments shall be made payable by written 

notice to AGT. The due date for payments to Clayton above provided is the date they are due to be 

received by Clayton, not the date of mailing. Any notices or reports required to be given to Clayton 

under this Agreement may be sent or delivered by email, facsimile transmission, United States mail, 

overnight courier, or personal delivery, to the following address(es) or facsimile numbers, or such 

other addresses as Clayton may provide by prior written notice to AGT, Prather and Magnanti: 

 Gilbert J. Premo, Esq. 

 500 Northfield Lane 

 Lincoln, CA 95648-8321 

 email: gilbertpremo@gmail.com facsimile: (415) 762-5350. 

Notices sent by mail shall be effective three (3) calendar days after placing in the United States Mail. 

Notices sent by email or facsimile transmission by 5:00 p.m. on a weekday (other than a Court 

holiday) shall be deemed effective when sent, otherwise notices so sent after 5:00 p.m, or on 

Saturday, Sunday or Holiday shall be deemed effective the next business day. Notices sent by 

personal delivery shall be effective when received 

7. Application for Court Order. The Parties shall promptly upon execution of this Agreement 

submit to the Court in the Federal Court Action a joint application requesting that the Court order 

the parties to comply with terms of this Agreement, and to reserve and retain jurisdiction to enforce 

the terms of this Agreement, and requesting that upon (but not before) the Court’s entry of such 

Order, and subject to the Court’s said reservation of jurisdiction to enforce the accordant Court 

Order , that the Federal Court Action be dismissed with prejudice. The form of the Application, 

 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 10 of 22
 Settlement Agreement, Page 5 

including the accordant Court Order to be applied for as to be set forth as "Exhibit 2" to the 

Application, is attached hereto as “EXHIBIT A” and incorporated by reference herein, and a signed 

copy of the Agreement shall be attached as "Exhibit 1" to both the Application, and to the proposed 

Order submitted to the Court, but to avoid unnecessary duplication this Agreement is not reproduced 

in "EXHIBIT A" . If the Court is unwilling to so order compliance with the terms of this Agreement 

and to reserve jurisdiction to enforce this Agreement, the parties shall meet and confer and attempt 

to arrive at a form of order which is acceptable to the Parties and the Court whereby Clayton may at 

the least summarily enforce the right to payment of the sum of $200,000.00 in the United States 

District Court for the Eastern District of California.. 

8. Personal Jurisdiction and Venue. Each party irrevocably agrees that any legal action or 

proceeding arising out of this Agreement or the transactions contemplated hereby shall be brought 

only in the United States District Court for the Eastern District of California, or, if for any reason 

said court does not have jurisdiction of the action or proceeding, in the Superior Court of the State of 

California, in and for the County of Placer, California. Each party irrevocably waives any objection 

to the venue of said courts (whether on the basis of forum non conveniens or otherwise) and accepts 

and submits to the jurisdiction of such courts in connection with any legal action or proceeding 

against it arising out of or concerning this Agreement. 

9. Release by AGT Parties. Automated Gaming Technologies, Inc., John B. Prather and 

Robert Magnanti, and each of them, shall and do hereby fully and forever release and discharge: 

Keith R. Clayton, and each of his agents and employees (any and all of the foregoing 

being hereinafter referred to, individually and collectively, as "CLAYTON 

RELEASEES”), from: 

any and all rights, claims, demands, debts, contracts, damages, actions or causes of action (any and 

all of the foregoing being hereinafter referred to, individually and collectively, as "CLAIMS") that 

the AGT RELEASORS may now have against the CLAYTON RELEASEES of whatever kind, 

character or description, including but not limited to any CLAIMS concerning, arising out of, or in 

any way whatsoever related to matters alleged the State Court Action or the Federal Court Action; 

PROVIDED, HOWEVER, that nothing in the foregoing the releases and discharges, or in this 

Agreement, is intended to, and nothing herein shall be construed to, to release or discharge any 

CLAIMS that any such releasor has or may have under the terms of this Agreement, or any 

instrument, document or order executed, entered or delivered pursuant hereto, and any such 

CLAIMS are excepted from the foregoing releases and discharges. 

10. Release by Clayton. , Keith R. Clayton shall and does hereby fully and forever release and 

discharge: 

 Automated Gaming Technologies, Inc., John B. Prather, and Robert Magnanti, 

and each of its or his officers, employees, and agents (any and all of the foregoing 

being hereinafter referred to, individually and collectively, as "AGT RELEASEES"), 

from: 

any and all rights, claims, demands, debts, contracts, damages, actions or causes of action (any and 

 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 11 of 22
 Settlement Agreement, Page 6 

all of the foregoing being hereinafter referred to, individually and collectively, as "CLAIMS") that 

Clayton may now have against the AGT RELEASEES of whatever kind, character or description, 

including but not limited to any CLAIMS concerning, arising out of, or in any way whatsoever 

related to the matters alleged in State Court Action or the Federal Court Action, PROVIDED, 

HOWEVER, that nothing in the foregoing the releases and discharges, or in this Agreement, is 

intended to, and nothing herein shall be construed to, to release or discharge any CLAIMS that 

Clayton has or may have under the terms of this Agreement, or any instrument, document or order 

executed, entered or delivered pursuant hereto, and any such CLAIMS are excepted from the 

foregoing releases and discharges. 

11. Waiver of CC §1542. Each party acknowledges that there is a risk that subsequent to the 

execution of this Agreement it or he will incur, suffer or discover injury, loss or damage, or any of 

these, which may be in some way caused by the matters which are the subject of this Agreement, but 

which are unknown and unanticipated at the time this Agreement is signed; and further there is a risk 

that any loss or damage presently known may be or may become more serious than the party may 

now expect or anticipate. Each releasor shall assume the above-mentioned risks and this Agreement 

and the releases herein shall apply to all unknown or unanticipated results of the matters which are 

the subject of this Agreement, as well as to those known and anticipated, and each party hereby 

waives all rights under California Civil Code, Section 1542, which states: 

“A general release does not extend to claims which the creditor does not know or 

suspect to exist in his or her favor at the time of executing the release, which if 

known by him must have materially affected his settlement with the debtor.” 

and any similar rights under the laws of any other jurisdiction. 

12. Attorney Fees Incurred in Enforcement. If any future legal action is brought to enforce this 

Agreement or any court order entered pursuant hereto, or recover damages for its alleged breach, the 

prevailing party in such action, insofar as it concerns this Agreement or such order, shall be entitled 

to recover from the other party its, his or her reasonable attorneys' fees and costs incurred therein, in 

addition to any compensatory or other damages that may be legally recoverable for the breach. 

13. No Admission. This Agreement, and the consideration hereby given and the releases herein 

provided, are solely the result of a compromise, and shall never at any time or for any reason be 

treated or considered in any context by any party, or any third person, as any admission of any 

liability, fault or responsibility whatsoever on the part of any party herein released, each of whom 

continues to wholly deny and disclaim any such liability, fault or responsibility. 

14. Integration. This Agreement is and shall constitute the complete and exclusive agreement 

of the parties concerning its subject matter. This Agreement supersedes all other prior 

communications, oral or written, between the parties relating to these subject matters, and there are 

no agreements or representations concerning its subject matter which are not set forth herein. Each 

party acknowledges that it, he or she, independently or through counsel and advisors, has made such 

investigation of the underlying facts, rights, duties, and legal theories as it or he deems sufficient, 

and such party is not relying in the execution and/or approval of this Agreement upon any 

representation of any person released, or anyone acting on behalf of any person released, regarding 

 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 12 of 22
 Settlement Agreement, Page 7 

 any matter, which is not set forth in writing herein. 

15. Interpretation. The captions of this Agreement are for convenience and reference only, and 

shall not be deemed a part of this Agreement. As used herein, the masculine, feminine and neutral 

gender shall include the other, and the singular shall include the plural, whenever the context so 

requires. The term "person" includes both a natural person and any legal entity or business 

organization. All parties and their counsel have been given the opportunity to review and comment 

on drafts of this Agreement, and this Agreement shall be deemed jointly drafted by the parties, and 

not construed for or against any party, but rather shall receive a reasonable construction. It shall be 

governed by and construed in accordance with the laws of the State of California. 

16. Counterparts. This Agreement may be executed in counterparts, and when all parties have 

duly signed and delivered this Agreement, shall constitute an agreement binding on all the parties 

notwithstanding that all the parties are not signatory to the same original or the same counterpart. A 

faxed signature, or a signature scanned and sent by email, shall be effective as an original to make 

this Agreement binding. 

17. Further Acts. Each party shall, on demand of the other, execute any document and perform 

any other act reasonably necessary to carry out the provisions and purposes of this Agreement. 

18. Severance in Event of Partial Invalidity. If any provision of this Agreement is declared or 

held invalid or unenforceable by any Court of competent jurisdiction, that invalidity or 

unenforceability shall not effect the validity and enforceability of the remainder of this Agreement, 

all of which shall remain binding and enforceable, subject to the exceptions stated in Paragraph is 7 

above if the Court does not enter the Order requested by the Parties. 

19. Parties, Successors, Warranty of Authority. This Agreement is binding on and shall inure 

to the benefit of the parties to it and their respective successors and assigns. Any person signing this 

Agreement represents and warrants that he has the legal capacity and authority to execute this 

Agreement and bind the party on whose behalf he executes it. 

// 

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Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 13 of 22
 Settlement Agreement, Page 8 

20. No Third Party Beneficiaries. No person other than the parties to it and their respective 

successors and assigns shall have any rights under this Agreement. 

 IN WITNESS WHEREOF, the undersigned hereby execute this Agreement. 

/s/ Keith R. Clayton_____ __ ____

KEITH R. CLAYTON 

Dated: October 3, 2015 

APPROVED AS TO FORM: 

/s/ Gilbert J. Premo 10/5/15 _____

GILBERT J. PREMO 

Attorney for Keith R. Clayton 

DONAHUE DAVIES, LLP 

By /s/Rebekah Morrissey _ 

James R. Donahue/Rebekah Morrissey 

Attorneys for Automated Gaming 

Technologies, Inc., John B. Prather 

and Robert Magnanti 

AUTOMATED GAMING TECHNOLOGIES, 

INC., a Nevada corporation 

By_/s/ Robert Magnanti_________________ 

 Robert Magnanti, Its President and 

By_/s/John B. Prather___________________

 John B. Prather, its Executive Vice-President 

Dated: October 2, 2015 

 /s/ John B. Prather__________________

John B. Prather 

Dated: October 2, 2015 

/s/ Robert Magnanti_________________ 

Robert Magnanti 

Dated: October 2, 2015 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 14 of 22
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1394872.1 1

JOINT APPLICATION FOR ORDER TO BE ENTERED PURSUANT TO SETTLEMENT AGREEMENT 

GILBERT J. PREMO (Bar No. 48503)

Attorney at Law 

500 Northfield Lane 

Lincoln, CA 95648-8321 

Telephone: (415) 974-6664 

Facsimile: (415) 762-5350 

gilbertpremo@gmail.com

Attorney for Plaintiff and Counter-Defendant 

KEITH R. CLAYTON 

DONAHUE DAVIES LLP

JAMES R. DONAHUE (Bar No. 105106) 

REBEKAH MORRISSEY (Bar No. 287379) 

P.O. Box 277010 

Sacramento CA 95827 

Telephone: (209) 817 2900 

Facsimile: (916) 817-2644 

JDonahue@donahuedavies.com 

RMorrissey@donahuedavies.com 

Attorneys for Defendant and Counter-Claimant 

AUTOMATED GAMING TECHNOLOGIES, INC. 

and Defendants John Prather and Robert Magnanti 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

KEITH R. CLAYTON, 

Plaintiff, 

v. 

AUTOMATED GAMING 

TECHNOLOGIES, INC., a Nevada 

corporation, et al. 

Defendants. 

__________________________________ 

AND RELATED COUNTERCLAIM

Case No. 2:13-cv-00907-JAM-EFB 

JOINT APPLICATION FOR ORDER TO 

BE ENTERED PURSUANT TO 

SETTLEMENT AGREEMENT 

EXHIBIT A 

 

The parties hereto, to wit plaintiff and counter-defendant Keith R. Clayton ("plaintiff" or 

Clayton"), and defendant and counterclaimant Automated Gaming Technologies, Inc. ("AGT") 

and defendants John Prather ("Prather") and Robert Magnanti ("Magnanti"), having entered into 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 15 of 22
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1394872.1 2

JOINT APPLICATION FOR ORDER TO BE ENTERED PURSUANT TO SETTLE AGREEMENT 

an agreement for settlement of this action ("Settlement Agreement"), a copy of which is attached 

hereto as "EXHIBIT 1" and incorporated as reference herein, said parties hereby apply to the 

Court for entry of an Order, in the form of the Proposed Order attached hereto as "EXHIBIT 2", 

ordering the parties to comply with the Settlement Agreement, and reserving jurisdiction to 

enforce the Settlement Agreement, and, except as so provided for compliance with the Settlement 

Agreement and enforcement thereof, dismissing this action with prejudice.. 

One of the principal considerations for the settlement involves payments in a total of 

$200,000.00 to be made AGT to plaintiff in a period of over three (3) years, with no payments 

being made immediately. The Supreme Court in Kokkonen v. Guardian Life Ins. Co. of Am., 511 

U.S. 375 (1994) held that: 

".. .[T]he parties' compliance with the terms of the settlement contract (or the 

court's "retention of jurisdiction" over the settlement contract) may, in the court's 

discretion, be one of the terms set forth in the [dismissal] order. .[T]he court is 

authorized to embody the settlement contract in its dismissal order (or, what has 

the same effect, retain jurisdiction over the settlement contract) if the parties agree 

(511 U.S. at 381-382)." 

 The parties here have so agreed. If the parties' obligation to comply with the settlement 

agreement is part of the order of dismissal, jurisdiction to enforce the agreement exists. 

Kokkonan, at 380-381. The settlement agreement can then be summarily enforced in the manner 

agreed to by the parties. See, Limbright v. Hofmeister, 566 F.3d 672 (6th Cir. 2009) (defendant 

agreed to ex-parte proceeding in the event of default in payment.) 

 However, the retention of jurisdiction must be done very carefully . According to the case 

of SmallBizPros, Inc. v. MacDonald, 618 F.3d 458 (5th Cir. 2010), the parties cannot file a 

stipulation for dismissal if the Court's jurisdiction is to be preserved, unless the effectiveness of 

the filing is expressly conditioned upon a future act of the Court's (such as the court issuing an 

order retaining jurisdiction). Therefore, the parties are instead filing this joint application for a 

Court order whereby the Court is requested to order performance of the Settlement Agreement 

and retain jurisdiction to enforce the same, and said conditions are in any resultant order of 

dismissal. Any request for dismissal of this action is expressly conditioned upon the Court's 

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1394872.1 3

JOINT APPLICATION FOR ORDER TO BE ENTERED PURSUANT TO SETTLE AGREEMENT 

future action in entering the Order hereby applied for which orders performance of the Settlement 

Agreement and reserves jurisdiction to enforce the same, and shall not otherwise be effective. 

This application is made pursuant to Rule 41 (a) (2) and (c) of the Federal Rules of Civil 

Procedure , but subject to the above condition. 

 The Court is respectfully requested by the parties to enter the accompanying Order. 

Respectfully submitted. 

Dated: October.__, 2015 /s/ Gilbert J. Premo____________________ 

 GILBERT J. PREMO 

 Attorney for Plaintiff and Counter-Defendant 

 KEITH R. CLAYTON 

 Dated: October __, 2015 DONAHUE DAVIES LLP

 By /s/ Rebekah Morrissey________________ 

 REBEKAH MORRISSEY 

 Attorneys for Defendant and Counter-Claimant 

 AUTOMATED GAMING TECHNOLOGIES, INC. 

 and Defendants John Prather and Robert Magnanti 

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1394872.1 1

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLEMENT AGREEMENT 

GILBERT J. PREMO (Bar No. 48503)

Attorney at Law 

500 Northfield Lane 

Lincoln, CA 95648-8321 

Telephone: (415) 974-6664 

Facsimile: (415) 762-5350 

gilbertpremo@gmail.com

Attorney for Plaintiff and Counter-Defendant 

KEITH R. CLAYTON 

DONAHUE DAVIES LLP

JAMES R. DONAHUE (Bar No. 105106) 

REBEKAH MORRISSEY (Bar No. 287379) 

P.O. Box 277010 

Sacramento CA 95827 

Telephone: (209) 817 2900 

Facsimile: (916) 817-2644 

JDonahue@donahuedavies.com 

RMorrissey@donahuedavies.com 

Attorneys for Defendant and Counter-Claimant 

AUTOMATED GAMING TECHNOLOGIES, INC. 

and Defendants John Prather and Robert Magnanti 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

KEITH R. CLAYTON, 

Plaintiff, 

v. 

AUTOMATED GAMING 

TECHNOLOGIES, INC., a Nevada 

corporation, et al. 

Defendants. 

__________________________________ 

AND RELATED COUNTERCLAIM

Case No. 2:13-cv-00907-JAM-EFB 

[PROPOSED] ORDER OF DISMISSAL 

PURSUANT TO SETTLEMENT 

AGREEMENT 

EXHIBIT 2 

 

The parties hereto, to wit plaintiff and counter-defendant Keith R. Clayton (plaintiff or 

"Clayton"), and defendant and counterclaimant Automated Gaming Technologies, Inc. ("AGT") 

and defendants John Prather ("Prather") and Robert Magnanti ("Magnanti"), having entered into a 

Case 2:13-cv-00907-JAM-EFB Document 221 Filed 10/15/15 Page 18 of 22
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1394872.1 2

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

written agreement for settlement of this action ("Settlement Agreement"), a copy of which is 

attached hereto as "EXHIBIT 1" and incorporated as reference herein, and the parties having filed 

a Joint Application for entry of this accordant Order, IT IS HEREBY ORDERED AS 

FOLLOWS: 

A. The parties shall comply with the terms of the Settlement Agreement attached hereto 

as "EXHIBIT 1", which is hereby incorporated by reference as if fully set forth herein. Without 

limitation: 

1. Payment of $200,000. AGT shall pay to Clayton the sum of TWO HUNDRED 

THOUSAND DOLLARS ($200,000.00), which shall be paid to Clayton in installments as 

follows: 

a. AGT shall pay Clayton the sum of SEVEN THOUSAND FIVE HUNDRED 

DOLLARS ($7,500.00) within thirty (30) days of the signing of this Agreement; 

b. AGT shall pay Clayton the additional sum of SEVEN THOUSAND FIVE 

HUNDRED DOLLARS ($7,500.00) within sixty (60) days of the signing of this Agreement; 

c. AGT shall pay to Clayton the remaining balance of ONE HUNDRED EIGHTY-FIVE 

THOUSAND DOLLARS ($185,000.00) in installments of FIVE THOUSAND DOLLARS 

($5,000) per month, for a period of thirty-seven (37) consecutive months, each installment being 

due on the first day of each calendar month hereafter, starting on the first day of the first calendar 

month that is over eighty (80) days from the signing of the Agreement, and continuing on the first 

day of each calendar month thereafter until the entire remaining unpaid balance of the originally 

agreed sum of $200,000.00 shall have been paid to Clayton; 

provided, however, that if any such installment is not paid within ten (10) days of its due date, 

and said default continues for ten (10) days after written notice of such default is given to AGT, 

the entire remaining unpaid balance of the originally agreed sum of $200,000.00 shall become 

immediately due and payable by AGT to Clayton, without further demand or notice. Interest shall 

accrue at the legal rate on the unpaid balance of the principal sum or any installments only from 

the date that payment is due. In the event of any such default in payment which has continued for 

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1394872.1 3

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

ten (10) or more days after such written notice of default, Clayton may apply to the Court in the 

Federal Court Action or the federal court in such district, by motion, or by ex-parte application, 

upon seven (7) days written notice to AGT and/or its then attorneys of record, if any, for entry of 

a order against AGT that it immediately pay to Clayton the entire remaining unpaid balance of the 

originally agreed sum of $200,000.00,.interest on past due balances, and reasonable attorney fees 

incurred in obtaining the said order. John Prather and Robert Magnanti are not hereby agreeing to 

make payments required of AGT hereunder as a personal liability of either Prather or Magnanti, 

but this is not intended and should not construed to in any way negate their fiduciary duties as 

corporate officers of AGT toward Clayton as a creditor of AGT. 

2. Royalties on CBMS. AGT shall also pay to Clayton ten percent (10%) of all 

gross revenues from future sales or licensing by AGT of the Currency Banking Management 

System (“CBMS”) software, or derivatives thereof (provided, however, that "derivatives" this 

shall not include the “Horizon” software), including: 

a. New sales or licensing of CBMS to existing CBMS customers, if any; 

b. New sales or licensing of CBMS to new CBMS customers, if any; 

c. Upgrades of or for new versions of the CBMS for which AGT charges the 

CBMS customer, if any; and 

d. A sale or assignment, if any, of the CBMS program or any copyright therein. 

Gross revenues for the purposes of the above royalty calculation shall not include charges for 

annual software maintenance which do not include charges for providing new or upgraded 

versions of the CBMS. If AGT bundles the charge for providing a new or upgraded version of 

the CBMS into an annual software maintenance charge, Clayton shall be entitled to his abovepercentage of the gross revenue therefrom, as applied to that portion of the total charge that 

represents AGT's charge for providing the new or upgraded version. AGT shall provide quarterly 

reports to Clayton of such sales or licensing, if any, for which Clayton is entitled to payment 

hereunder, and pay over Clayton's share within fifteen (15) days of the end of each quarter in 

which AGT receives revenues as to which Clayton is entitled to such share hereunder. As used 

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1394872.1 4

[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

herein, the "Horizon" software includes only a "Windows" based WPF (Windows Presentation 

Foundation) application. "Derivatives" of the CBMS include, among other things, any "webbased" application that is based upon the Administrative Application copyrighted by Clayton or 

which is based upon or utilizes any source code written by Clayton for the CBMS. 

3. Source Code of CBMS. Clayton will deliver to AGT, within fifteen (15) days 

after Clayton receives the second installment payment of $7,500.00 required under paragraph “1" 

above (so that total payments at that point equal at least $15,000.00), a copy of the source code in 

his possession for that version of the CBMS software written by Clayton which was the last 

version he delivered to AGT, as well as the source code of the work-in-process version 3.0 of the 

CBMS. All such source code shall be delivered without any warranty, express or implied, 

whatsoever by Clayton, and in its "AS IS" condition. Any warranty of merchantability and any 

warranty of fitness for a particular purpose is expressly disclaimed. 

4. Copyright in Administrative Application. Clayton shall retain all copyright and 

ownership rights in the “Administrative Application” software written by Clayton, including but 

not limited to the “KC Administrative Application” for which a copyright was issued on July 20, 

2013. Clayton hereby grants to AGT a perpetual, non-exclusive, royalty-free, license, to use the 

Administrative Application in AGT’s possession, without any additional charge, so long as AGT 

is not in default under this Agreement. Clayton shall not, for a period of two (2) years after the 

signing of this Agreement compete with AGT, by using the Admin App in a competing employee 

banking application. 

 B. The Court retains and reserves jurisdiction to enforce the Settlement Agreement and 

this accordant Order; 

C. Subject to the provisions of paragraphs A and B above, this action, including 

plaintiff’s complaint against AGT, Prather, and Magnanti, and AGT’s counterclaim against 

plaintiff, is dismissed with prejudice, , each party to bear its own attorney fees and costs 

heretofore incurred. 

// 

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[PROPOSED] ORDER OF DISMISSAL PURSUANT TO SETTLE AGREEMENT 

D. The foregoing dismissals are voluntary, and shall not operate as an adjudication on 

the merits under Rule 41 of the Federal Rules of Civil Procedure. 

IT IS SO ORDERED: 

Dated: __________, 2015 

 ________________________________________ 

 JOHN A. MENDEZ 

 United States District Judge 

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