EXHIBIT 10.2
AGREEMENT FOR TECHNOLOGY TRANSFER,
MANUFACTURE, DISTRIBUTION AND AFFECTING
PATENT, TRADEMARK AND COPYRIGHTS
(SOVEREIGN NATIONS)
* * * * *
DIGIDEAL CORPORATION
AND
PDS FINANCIAL
* * * * *
TABLE OF CONTENTS
1. Parties.......................................................................................................1
2. Background....................................................................................................1
3. Definitions and Subject Matter................................................................................2
4. Objectives....................................................................................................4
5. Scope of Rights Limited to Specified Designated Products......................................................5
6. Grant of Exclusive Rights.....................................................................................5
7. Agreement to Transfer Rights..................................................................................6
8. Subject Matter Under Obligation To Transfer...................................................................7
9. Option to Repurchase Rights...................................................................................7
10. Reservation of Rights........................................................................................7
11. Geographical Scope of this Agreement.........................................................................8
12. RESERVED.....................................................................................................8
13. License Fees.................................................................................................8
14. Granting of Subordinate Rights...............................................................................9
15. Grant of Trademark License..................................................................................11
16. Geographical Scope of Trademark License.....................................................................11
17. License to Sublicense Trademarks............................................................................11
18. Quality Control Involving Trademarks........................................................................11
19. Marking of Trademarks and No Re-Branding....................................................................12
20. License of Copyright Works..................................................................................12
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21. Prototype...................................................................................................13
22. Transfer of Support Documentation...........................................................................13
23. Commercial Production of Designated Product.................................................................13
24. Components Used in Production of Designated Product.........................................................13
25. Costs of Production for Designated Product..................................................................14
26. Installation and Setup of Designated Product................................................................14
27. Initial Charges.............................................................................................14
28. Revenue from Rentals and Sales..............................................................................15
29. Handling of Revenue from Designated Products................................................................15
30. Reporting of Revenue and Designated Products................................................................16
31. Other Types of Revenue......................................................................................16
32. Ownership of Designated Product.............................................................................17
33. Currency and Money..........................................................................................17
34. Accounting Audits...........................................................................................17
35. Sales Versus Rentals........................................................................................18
36. Sublicensing................................................................................................18
37. Certifying and Licensing of Designated Products.............................................................19
38. Licensing With Gaming Commissions...........................................................................19
39. Installation, Servicing and Maintenance of Designated Product...............................................20
40. Technical Support and Reimbursement for Expenses............................................................20
41. Confidentiality of Disclosure and Designated Technology.....................................................20
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TABLE OF CONTENTS
42. RESERVED....................................................................................................21
43. RESERVED....................................................................................................22
44. Patent Applications.........................................................................................22
45. Registration of License.....................................................................................22
46. Minimum Performance by PDS Financial........................................................................22
47. Improvements and Developments in Designated Technology......................................................23
48. Employee Invention Agreements...............................................................................24
49. Marking of Products Embodying Patent Rights and Copyrights..................................................24
50. Assignment and Ownership....................................................................................25
51. Warranties of Digideal......................................................................................25
52. Disclaimer of Warranties by Digideal........................................................................25
53. Warranties of PDS Financial.................................................................................25
54. Disclaimer of Warranties by PDS Financial...................................................................26
55. Enforcement of Patent and Other Exclusive Rights Against Infringers.........................................26
56. Notification of Infringement................................................................................27
57. Claims From Third Parties...................................................................................27
58. Covenants Not To Compete....................................................................................27
59. Compliance with Export of Technology and Other Laws.........................................................28
60. Conversion To Non-Exclusive.................................................................................28
61. Effect of Conversion........................................................................................29
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TABLE OF CONTENTS
62. Termination by Digideal.....................................................................................29
63. Effect of Termination by Digideal...........................................................................30
64. Termination by PDS Financial................................................................................31
65. Effect of Termination by PDS Financial......................................................................31
66. Modification of Agreement...................................................................................32
67. No Waiver...................................................................................................32
68. Severability................................................................................................32
69. Force Majeure...............................................................................................32
70. Applicable Law..............................................................................................32
71. Jurisdiction and Venue......................................................................................32
72. Notices.....................................................................................................32
73. Relationship of the Parties.................................................................................33
74. Attorney's Fees.............................................................................................33
75. Integration, Entire Agreement...............................................................................33
76. Counterpart Original Agreements.............................................................................33
77. Effective Date of Agreement and Term of Agreement...........................................................33
78. Arbitration.................................................................................................34
79. Execution by Digideal - Digideal Corporation................................................................35
80. Execution by PDS Financial - PDS Financial..................................................................36
81. Appendix A - Designated Trademarks..........................................................................37
82. Appendix B - Exemplary Mortgage.............................................................................38
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TABLE OF CONTENTS
COPYRIGHT (C) RANDY A. GREGORY 1999 ALL RIGHTS RESERVED
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1. PARTIES
1.1 This Agreement, effective August 31, 1999, is made by and between:
(a) DIGIDEAL CORPORATION, a Nevada corporation, whose business
address is 811 South Sixth Street, Las Vegas, NV 89101, (hereinafter
referred to as "DIGIDEAL" for convenience); and,
(b) PDS FINANCIAL CORPORATION, a corporation organized under
the laws of Minnesota, and its subsidiaries and affiliates, whose
address is 6171 McLeod Drive, Las Vegas, NV 89120-4048, (collectively
hereinafter referred to as "PDS FINANCIAL" for convenience).
2. BACKGROUND
2.1 DIGIDEAL has acquired and has developed improved technology
directed to apparatuses and methods for playing live participant table card
games using automated electronic table card game systems with electronic card
displays for multiple participants. DIGIDEAL has devoted substantial time,
effort and money to that development and now intends to transfer technology to
PDS FINANCIAL. This transfer of technology is intended to facilitate and
authorize PDS FINANCIAL to additionally develop the planned product, to bring
the planned product to commercialization, and allow manufacture of the planned
product.
2.2 As a result of DIGIDEAL's activities it now owns certain
technology, including patent application rights, copyrights, trademarks, trade
secrets, know-how and other proprietary information relating to such technology.
2.3 PDS FINANCIAL is involved with and interested in manufacturing and
promoting equipment and games used in the gaming industry. PDS FINANCIAL desires
to acquire rights in the technology developed by or for DIGIDEAL and to
manufacture, distribute, sell, lease, use, service and promote products
utilizing such technology, or license or sublicense others to do so.
2.4 It is the intent of the parties to provide for a business
relationship wherein DIGIDEAL will be supplying technology, proprietary rights,
and will be supplying non-gaming device components to be used by PDS FINANCIAL.
It is also the intent of the parties that PDS FINANCIAL will be manufacturing
and assembling the systems. PDS FINANCIAL also will be programming the software,
which will be used as part of the systems and which will control operation of
the systems. PDS FINANCIAL will thus be controlling the manufacture of the
systems and controlling the distribution of the systems to the gaming industry
by either renting the systems or selling them to casinos or other users.
2.5 It is also the intent of the parties to provide for transfer of
technology from DIGIDEAL to PDS FINANCIAL to facilitate the manufacture,
assembly and programming of the gaming systems. This will enhance development
and aid in focused control of the finished product and software by PDS FINANCIAL
to better
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serve the industry and provide security in the production of the
finished product. To this end, various technical developments will be
confidentially disclosed to PDS FINANCIAL, and there will be a transfer of
patent and copyrights for the inventions and software associated with the
technology being transferred and used in the systems, which will be produced and
distributed by PDS FINANCIAL.
2.6 In consideration of the premises, covenants and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
have agreed to the terms and conditions provided in this Agreement.
3. DEFINITIONS AND SUBJECT MATTER
3.1 ORIGINAL PATENT APPLICATION - DIGIDEAL is the owner of all right,
title, and interest in certain inventions described in a U.S. Patent Application
Serial No. 09/041,373 entitled "Automated System For Playing Live Casino Table
Games Having Tabletop Changeable Playing Card Displays and Play Monitoring
Security Features", filed March 11, 1998. Such patent application shall be
referred to as the original patent application.
3.2 FIRST C-I-P PATENT APPLICATION - DIGIDEAL is also the owner of all
right, title, and interest in certain inventions described in a U.S. Patent
Application Serial No. 09/159,813 entitled "Automated System For Playing Live
Casino Table Games Having Tabletop Changeable Playing Card Displays and Play
Monitoring Security Features", filed September 23, 1998. Such patent application
shall be referred to as the first C-I-P patent application.
3.3 SECOND C-I-P PATENT APPLICATION - DIGIDEAL is also the owner of all
right, title, and interest in certain inventions described in a U.S. Patent
Application Serial No. 09/301,267 entitled "Automated System For Playing Live
Casino Table Games Having Tabletop Changeable Playing Card Displays and Play
Monitoring Security Features", filed April 27, 1999. Such patent application
shall be referred to as the second C-I-P patent application. The Second C-I-P
patent application also includes a related Patent Cooperation Treaty,
Application Serial No. PCT/US99/05361, filed March 11, 1999 of same title and
disclosure as the Second C-I-P patent application.
3.4 ANCILLARY PATENT APPLICATION - DIGIDEAL is also the owner by
assignment of all right, title, and interest in certain inventions described in
a U.S. Patent Application Serial No. 09/215,391 filed December 18, 1998 entitled
"Method of Playing Blackjack with a Side Wager". Such patent application and any
resulting continuations or divisional are referred to herein as the ancillary
patent application.
3.5 THE INVENTIONS - The term "The Inventions" (both capitalized) will
include those inventions described in the original patent application and the
ancillary patent application. The Inventions shall also include those inventions
which are disclosed in said original patent application, the ancillary patent
application and the first and second C-I-P applications, whether there are
claims in
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such patent applications when filed, or if such patent applications
are later amended to include such claims. The Inventions shall also include
inventions which are the subject of any further patent application or patent
applications which are either a continuation or divisional patent application
based upon the original patent application, the ancillary patent application or
said C-I-P applications, which lawfully claims patent rights which have a valid
claim or right to claim priority based upon the original patent application, the
ancillary patent application or said C-I-P applications. Any subsequent
continuation-in-part applications filed based upon said original patent
application or the ancillary patent application will be considered part of The
Inventions to the extent of any patent claims contained therein are issued as a
patent from a subsequent continuation-in-part application and are supportable
upon the original disclosures of the original patent application, ancillary
patent application or the first and second C-I-P applications, or to the extent
of the issued patent claims based upon such subsequent continuation-in-part
application have a scope which falls within the scope of any other patent claim
covering The Inventions which is supportable upon the disclosure of the original
patent application, the ancillary patent application, or first or second C-I-P
applications.
3.6 THE INVENTIONS, ADDITIONAL ASPECTS
(a) The Inventions also includes improvements as specifically
provided for in part 47.
(b) The Inventions also includes any inventions included in
any patent application filed on Designated Technology as defined
hereinafter.
3.7 THE PATENTS - The original patent application, any patents
resulting from said original patent application either directly or indirectly,
and any other patent applications or patents granted on The Inventions will be
referred to herein as "The Patents".
3.8 THE PATENT RIGHTS - The term "Patent Rights" (both capitalized)
shall refer to any patent rights on The Inventions which issue in patents which
have legal effect within the Designated Territories.
3.9 DESIGNATED TECHNOLOGY - In addition to the technical information
contained in The Patents, other related technical and business information have
also been developed by DIGIDEAL generally relating to The Inventions described
in the above-referenced patent applications and prototypes and subsequent
designs developed since the filing of the original patent application. Exclusive
rights under the laws of trade secrets and know-how protect much or all of such
proprietary information. The Inventions, all Patent Rights which may be granted
thereon, and related trade secrets, know-how and other proprietary information
are under this Agreement and are hereinafter referred to for convenience and
brevity as "Designated Technology".
3.10 DESIGNATED TECHNOLOGY RIGHTS - DIGIDEAL has exclusive property
rights or claims to exclusive property rights under the laws of the United
States
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and foreign countries in such Designated Technology including potential
patent rights (Patent Rights), copyrights (The Copyrights), trade secret rights,
know-how rights and technical information rights. Such exclusive rights shall
herein be referred to collectively as the Designated Technology Rights.
3.11 THE COPYRIGHT WORKS - DIGIDEAL may provide or hereafter develop,
in-full or in-part, works in which copyrights exists. These works shall be
referred to as "The Copyright Works" and may include certain writings, computer
software, business plans, technical descriptions, drawings, graphical works,
promotional materials, writings, videos, sound recordings and/or other works
produced by or for DIGIDEAL which relate to the Designated Technology and the
business related thereto. Such works are also under this Agreement and are
hereinafter referred to as "The Copyright Works". The subject matter considered
within The Copyright Works may include proprietary, trade secret or know-how
information which fall within the definition of Designated Technology.
Additionally, their may be works within The Copyright Works which exist for the
written, graphic or other expression which is legally and conceptually separable
from the technological content being expressed. Such expressions are protected
under The Copyrights associated with The Copyright Works, and the Copyrights
associated therewith may outlive any other exclusive rights in the Designated
Technology.
3.12 THE COPYRIGHTS - The copyrights attendant to The Copyright Works
shall herein be referred to as "The Copyrights" (both capitalized).
3.13 DESIGNATED TRADEMARKS - DIGIDEAL further desires to grant rights
in certain trademarks, which may be created for use in connection with the
Designated Technology. Any such trademarks are agreed by the parties to be
considered under this Agreement, and herein referred to as "Designated
Trademarks". Further trademarks may be added to the subject matter of Designated
Trademarks through written Trademark Addenda submitted by DIGIDEAL and accepted
by PDS FINANCIAL.
3.14 DESIGNATED TRADEMARK RIGHTS - The rights associated with such
Designated Trademarks are the "Designated Trademark Rights".
3.15 DESIGNATED PRODUCTS - Products which use the Designated Technology
are herein referred to as "Designated Products". Use of the Designated
Technology for purposes of this definition shall include products which
incorporate designs which are based on the Designated Technology, products which
use any processes included in the Designated Technology, and products which are
produced using any new production processes included in the Designated
Technology.
3.16 DESIGNATED TERRITORY - Part 11 defines the term Designated
Territory as used in this Agreement.
4. OBJECTIVES
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4.1 PDS FINANCIAL - PDS FINANCIAL wishes to obtain Designated
Technology, including proprietary information embodying and describing the
Designated Technology and to obtain and/or license rights under The Patents,
Designated Technology Rights, The Copyrights and Designated Trademark Rights for
purposes of conducting business using such Designated Technology, The Copyrights
and Designated Trademarks. With regard to licensed rights, PDS FINANCIAL also
desires to obtain authority to sublicense others who will participate in the
distribution of the Designated Product.
4.2 DIGIDEAL - DIGIDEAL wishes to transfer technology to PDS FINANCIAL
and gain revenue from the commercialization of Designated Products.
5. SCOPE OF RIGHTS LIMITED TO SPECIFIED DESIGNATED PRODUCTS
5.1 The rights granted to PDS FINANCIAL hereunder shall only apply to
Designated Products which are included within the following definition, or as
otherwise agreed by the parties hereto in writing:
Gaming systems which utilize automated electronically controlled visual
displays which during the play of games include traditional playing
card depictions or depictions of cards with slot symbols or merely slot
symbols. The symbols are displayed by said visual displays, said gaming
systems being adapted for play by at least one dealer and at least one
player who are physically present in a single room to play a card game
using such playing card depictions.
The above definition includes three systems under development, which are
trademarked as "Digital 21", "SlotJack" and "Bonanza BlackJack" and any future
version of these games.
5.2 The rights granted herein also do not extend to any other products
beyond the specification contained in the above paragraph 5.1 unless agreed to
in writing by DIGIDEAL.
5.3 The rights granted herein do not extend to new products beyond the
specification contained in the above paragraph 5.1 unless agreed to in writing
by DIGIDEAL.
6. GRANT OF EXCLUSIVE RIGHTS
6.1 DIGIDEAL hereby grants to PDS FINANCIAL certain exclusive rights as
detailed below within the Designated Territories (see part 11):
(a) The rights to manufacture, assemble, produce, program,
reprogram, market, promote, lease, use, sell, service, repair, recover
(repossess), and remanufacture products which are within The Patent
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Rights and which are otherwise within the scope of the rights being
licensed in the Designated Products under this Agreement;
(b) The rights to practice or otherwise use any methods or
processes which are within The Patent Rights and which are otherwise
within the scope of the rights being licensed in the Designated
Products under this Agreement;
(c) The rights to manufacture, assemble, produce, program,
reprogram, market, promote, lease, use, sell, service, repair, recover,
and remanufacture products which are leased or sold using The
Trademarks or which otherwise utilize The Trademark Rights in
connection therewith;
6.2 The rights provided in this part include exclusive rights which
are within The Patent Rights and which are otherwise within the scope of the
rights being licensed in the Designated Products under this Agreement.
7. AGREEMENT TO TRANSFER RIGHTS
7.1 DIGIDEAL agrees to transfer to PDS FINANCIAL rights as provided for
in section 8, subject to the following terms, conditions and limitations.
7.2 The provisions of this section involving assignment of ownership
rights to PDS FINANCIAL shall only apply to North America and are subject to the
limitations of part 12.
7.3 DIGIDEAL will transfer to PDS FINANCIAL the property rights subject
to the obligation of section 8 immediately after being notified by PDS
FINANCIAL, and conditioned upon full payment to DIGIDEAL of the amounts owed by
PDS FINANCIAL under the provisions of section 13.1(a). Notification by PDS
FINANCIAL will be in writing. and provide: a) a statement that transfer of the
property right or rights is needed in accordance with this Agreement; and, b) an
explanation that at least one of the following events has occurred which
triggers this provision for transfer:
(a) Upon PDS FINANCIAL submitting the Designated Product in an
effort to obtain the license or licenses from the Nevada Gaming
Commission which allow PDS FINANCIAL to exercise the rights provided
for in part 6.1(a);
(b) If PDS FINANCIAL is in production and actively
distributing the Designated Product in any jurisdiction within the
Designated Territory.
7.4 Any rights not authorized to be practiced by PDS FINANCIAL under
the terms of this Agreement are exclusively licensed back to DIGIDEAL with
regard to any of The Patents which have been transferred to PDS FINANCIAL
under the terms of part 7.
7.5 Prior to any transfer of one or more patents from DIGIDEAL to PDS
FINANCIAL which comprise The Patents, PDS FINANCIAL shall execute a mortgage of
patent rights in favor of DIGIDEAL. Such mortgage of patent rights shall be
executed by a corporate officer of PDS FINANCIAL, be notarized, and shall bear
the corporate seal, if a seal is available. The mortgage of patent rights shall
be
Page 6 of 38
delivered in original form to DIGIDEAL or their agent who shall have the
mortgage of patent rights officially recorded with the U.S. Patent and Trademark
Office, or any other appropriate patent office or other authority relating to
the Designated Territory.
7.6 The mortgage shall secure the obligations owed by PDS FINANCIAL to
pay DIGIDEAL under the terms of this Agreement. Failure of PDS FINANCIAL to make
all payments owed to DIGIDEAL under this Agreement shall be a default which can
be remedied by foreclosure upon the mortgage of patent rights. See Appendix B to
this Agreement.
8. SUBJECT MATTER UNDER OBLIGATION TO TRANSFER
8.1 The obligation to transfer rights as provided for in part 7 shall
apply to the following property rights:
(a) Patent rights contained in pending patent applications and
issued patent rights included within The Patent Rights which are
effective within the United States of America.
(b) Registered Copyrights on all Copyright Works which are
incorporated into the Designated Product as leased or sold which are
effective within the United States of America.
9. OPTION TO REPURCHASE RIGHTS
9.1 DIGIDEAL shall have an option to repurchase any and all rights
which have been transferred under the provisions of part 7. The option to
repurchase shall be exercisable upon the following conditions:
(a) If PDS FINANCIAL loses its license with the Nevada Gaming
Commission or other applicable authority of the state of Nevada with
regard to manufacturing or distributing Designated Product, and PDS
FINANCIAL cannot achieve reinstatement within one (1) year after losing
said license.
(b) If PDS FINANCIAL loses its license with three (3) or more
gaming commissions of states other than the state of Nevada with regard
to manufacturing or distributing Designated Product, and PDS FINANCIAL
cannot achieve reinstatement within one (1) year in at least one of the
three states.
(c) If PDS FINANCIAL is terminated under the provisions of
this Agreement.
9.2 The option to repurchase shall be exercised by notifying PDS
FINANCIAL in writing that DIGIDEAL wants to exercise the option provided for
in this section. DIGIDEAL shall tender payment in the amount of One Thousand
Dollars ($1,000) along with the written notification that it is exercising
this option. PDS FINANCIAL shall then execute an assignment of patent rights
covering the patent or
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patents for which the option is being exercised. The option shall apply to
one or more patents which are within the definition of The Patents.
10. RESERVATION OF RIGHTS
10.1 Any rights not authorized to be practiced by PDS FINANCIAL under
the terms of this Agreement are specifically reserved by DIGIDEAL with regard to
any of The Patents which are not transferred to PDS FINANCIAL under the terms of
part 7.
10.2 Any non-patent rights not authorized to be practiced by PDS
FINANCIAL under the terms of this Agreement are specifically reserved by
DIGIDEAL.
11. GEOGRAPHICAL SCOPE OF THIS AGREEMENT
11.1 The rights granted under this Agreement shall apply to the
following Designated Territories except as otherwise specifically limited -
(a) Any and all United States American Indian Tribes as
defined by the Indian Gaming Regulatory Act, 25 U.S.C. ss.2701 ET Seq.
("Indian Tribes").
12. RESERVED.
13. LICENSE FEES
13.1 PDS FINANCIAL shall pay DIGIDEAL license fees totaling *** ($***
U.S.).
(a) A first portion of the license fees shall be paid in the
form of a single payment in the amount of *** ($*** U.S.). The first
portion payment must be paid at the time this Agreement is signed by
both parties.
(1) The first portion payment must be fully received
by DIGIDEAL without dishonor or other impediment to DIGIDEAL's
complete ownership thereof no later than ten (10) days after
the effective date of this Agreement, or else this Agreement
shall be automatically void AB INITIO.
(2) The first portion license fee is subject to
refund during a waiting period of thirty days (30) beginning
on the effective day of this Agreement. Such refund will be
made if PDS FINANCIAL demonstrates a reasonable basis for
terminating the Agreement based upon further analysis of
patent issues. If such refund is requested then the Agreement
will terminate without cure unless the
***Confidential treatment requested pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
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parties subsequently reinstate the Agreement in writing.
Refund shall be made by DIGIDEAL within ten (10) days of
demand by PDS FINANCIAL in writing.
(3) The first portion license fee is subject to
refund if Gaming Laboratories International ("GLI") does not
approve the Designated Product for manufacture or sale to
Indian Tribes within two years from the effective date of this
Agreement. If PDS FINANCIAL elects to have this amount
refunded, then DIGIDEAL shall be empowered to terminate this
Agreement without any opportunity to cure and without any
waiting period. If desired, DIGIDEAL can terminate this
Agreement after PDS FINANCIAL seeks refund and such
termination will become effective upon payment of the refund
for the first portion license fee. Any fees actually paid for
other portions of the license fee shall not be subject to
refund.
(b) A second portion of the license fees shall be paid in the
amount of *** ($*** U.S.) which shall be paid by ***. Such portion of
gross revenues shall be set aside until the second portion of the
license fees and any other portions of the license fees are fully paid.
13.2 All licensee fees paid are non-refundable except as provided for
above in connection with the first portion of the license fees.
14. GRANTING OF SUBORDINATE RIGHTS
14.1 DIGIDEAL hereby grants to PDS FINANCIAL rights to license or
sublicense one or more of the rights granted to PDS FINANCIAL under this
Agreement, subject to the following conditions and limitations.
14.2 Any rights granted by PDS FINANCIAL to third parties must be
within the scope of the associated rights granted to PDS FINANCIAL hereunder. If
the rights of PDS FINANCIAL hereunder are subject to termination or diminishment
in any respect, then any grant of rights by PDS FINANCIAL to third parties must
similarly be subject to termination or diminishment in the same regard. Any
failure on the part of PDS FINANCIAL to adequately provide limitations in
agreements with third parties shall not work to limit DIGIDEAL's rights under
this Agreement and shall be considered a material breach under this Agreement.
14.3 PDS FINANCIAL warrants that it will only enter into agreements
with any third parties which contain full provisions limiting the third party's
rights relative to DIGIDEAL. PDS FINANCIAL further warrants that in any and all
agreements with third parties granted under this Agreement, that language will
be included
***Confidential treatment requested pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
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indicating that the Agreement has been entered into in furtherance of an
agreement with DIGIDEAL and that Digideal may have rights which affect the
agreement with third parties and acknowledging that rights held by DIGIDEAL
may affect rights of any such third party.
14.4 PDS FINANCIAL shall have the authority to grant subordinate rights
allowing third parties to exclusively or non-exclusively practice the following
rights within the scope of rights licensed to PDS FINANCIAL under part 6. Any
grant of subordinate rights shall only cover a portion of the Designated
Territory, or a portion of the commercial areas contained within the Designated
Territory and authorized field of use limitations provided for herein.
14.5 PDS FINANCIAL is empowered to grant subordinate rights
falling within the following rights:
(a) Distribute, lease, use, service and promote products or
practice methods protected under The Patents;
(b) Distribute, lease, use, service and promote products which
incorporate or use the Designated Technology; and
(c) Practice methods contained in the Designated Technology.
14.6 Part 11 shall apply to define the geographical scope of the
subordinate rights granted in this part.
14.7 The grant by PDS FINANCIAL of any license or sublicense hereunder
will be limited in time to no more than five (5) calendar years. If there are
any provisions for renewal, then any renewal will be subject to denial by
DIGIDEAL should PDS FINANCIAL's rights become converted to non-exclusive or be
terminated.
14.8 Any licensee or sublicensee of PDS FINANCIAL which participates in
a breach of this Agreement shall be subject to conversion or termination under
the same terms as are applicable to PDS FINANCIAL.
14.9 The grant of all or substantially all of the exclusive Patent
Rights by PDS FINANCIAL to another party shall be considered an assignment and
not a sublicense, and thus cannot be licensed, sublicensed or assigned without
DIGIDEAL's approval in writing.
14.10 Any licensee or sublicensee granted rights under PDS FINANCIAL
must be fully licensed with any and all gaming commissions having jurisdiction
over the activities of the licensee or sublicensee as authorized under this
Agreement.
15. GRANT OF TRADEMARK LICENSE
DIGIDEAL hereby grants to PDS FINANCIAL an exclusive trademark license
to use the Designated Trademarks, in connection with the sale, distribution,
promotion or use of the Designated Products.
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16. GEOGRAPHICAL SCOPE OF TRADEMARK LICENSE
The geographical scope of the trademark license of section 15 shall be
the same as that provided for in section 11.
17. LICENSE TO SUBLICENSE TRADEMARKS
17.1 DIGIDEAL agrees that PDS FINANCIAL shall have the right to
sublicense others to use one or more of the Designated Trademarks in one or more
of the manners of use allowed to PDS FINANCIAL. All agreements to sublicense by
PDS FINANCIAL shall include terms requiring at least the requirements of
sections 18-19 below.
17.2 If any Trademark Rights are transferred from DIGIDEAL to PDS
FINANCIAL, such as in a manner analogous to the provisions of section 7, then
the rights transferred shall be subject to reconveyance to Digideal under the
conditions of section 9.
18. QUALITY CONTROL INVOLVING TRADEMARKS
18.1 PDS FINANCIAL does not require any further approvals to use the
Designated Trademarks in connection with the Designated Products.
18.2 If PDS FINANCIAL wishes to use the Designated Trademarks with any
products different from the Designated Products, then PDS FINANCIAL shall notify
DIGIDEAL in writing prior to the initial distribution of any such products which
are to be marked with the Designated Trademarks. This requirement shall not
apply to any new products which are either supplied by DIGIDEAL or if DIGIDEAL
supplies all or substantially all of the components used by PDS FINANCIAL in
assembling and manufacturing the finished product. Any such notification shall
explain the nature of the new products to be distributed and the planned date of
first distribution. DIGIDEAL shall have at least four (4) weeks to review each
such Trademarked Product prior to the planned date of first distribution.
Thereafter DIGIDEAL shall approve distribution in writing, or indicate the
reasons for which approval is denied, or indicate the changes needed for
approval. PDS FINANCIAL may not distribute any new product bearing a Designated
Trademark until written approval is received from DIGIDEAL. DIGIDEAL shall not
make requirements for quality which are unreasonable in light of standard
industry practices.
18.3 PDS FINANCIAL agrees to permit DIGIDEAL or its representative to
inspect facilities where any products bearing a Designated Trademark are being
manufactured and packaged upon prior notice of three (3) business days.
18.4 DIGIDEAL shall have the right upon prior notice of three (3)
business days to enter upon or have its representatives enter upon the premises
of PDS FINANCIAL or any sublicensee to inspect the quality of goods being sold,
services being rendered, or goods or services which otherwise use the Designated
Trademarks.
Page 11 of 38
18.5 In the event that the above-stated quality standards are not met
or maintained throughout the term of this Agreement, DIGIDEAL has the right to
require that PDS FINANCIAL comply with such quality standards within seven (7)
business days or cease production until compliance can be provided.
18.6 The provisions of 18.2-18.5 immediately above shall apply fully to
any and all sublicenses which PDS FINANCIAL may enter into with third parties.
19. MARKING OF TRADEMARKS AND NO RE-BRANDING
19.1 To the extent there will be any marking of Designated Trademarks
by PDS FINANCIAL under this Agreement, PDS FINANCIAL agrees to mark all labels,
advertising, packaging and other instances of use of the Designated Trademarks
with either the notification (TM) or with the symbol consisting of an R within a
circle (R) to indicate such trademarks are registered, if and when such
trademarks do become registered by the United States Patent and Trademark
Office. Usage of the Designated Trademarks by PDS FINANCIAL or any sublicensee
in the U.S. and/or any foreign country shall comply with all established
practices of such countries for notifying or indicating that the Designated
Trademarks are claimed as exclusive.
19.2 PDS FINANCIAL also agrees that no re-marking or re-branding of
Designated Products will occur without written authorization from DIGIDEAL.
Re-marking or re-branding of Designated Products means application of any
additional or changed trademark or other indication of origin upon the
Designated Product other than trademarks applied under this Agreement or under
another or modified agreement with DIGIDEAL or at DIGIDEAL's instruction when
the Designated Products are originally manufactured, serviced, maintained,
rebuilt, or repaired.
20. LICENSE OF COPYRIGHT WORKS
20.1 DIGIDEAL hereby grants to PDS FINANCIAL an exclusive license to
exercise any rights available under copyrights. The rights granted under this
provision are for use of The Copyrights but only in connection with Designated
Products. The geographical scope of the license shall be the same as that
provided for in section 11. The license granted under this part also includes
the right to sublicense others to perform any acts PDS FINANCIAL has a right to
perform with respect to The Copyright Works.
20.2 To the extent that any Copyrights are transferred from DIGIDEAL to
PDS FINANCIAL under the provisions of section 7, then the license is superseded
by the transfer until such time as any reconveyance may occur to DIGIDEAL.
21. PROTOTYPE
21.1 DIGIDEAL agrees to transfer a currently developed prototype unit
of the Designated Product along with associated software and other key technical
Page 12 of 38
information needed for operation within thirty (30) days after the effective
date of this Agreement.
21.2 The prototype shall be used for testing and as is otherwise
appropriate to the project, but is not intended to be sold or placed for
rentals.
22. TRANSFER OF SUPPORT DOCUMENTATION
22.1 DIGIDEAL shall disclose to PDS FINANCIAL at its chosen location,
equipment and documentation, including without limitation, drawings, books,
setup information, maintenance information, table mounting layouts, software,
hardware, source codes, and related materials needed by PDS FINANCIAL to
manufacture, market, promote, lease, service, repair, and remanufacture the
Designated Product.
22.2 All Designated Technology in addition to the prototype covered in
part 21, which is obligated to be transferred to PDS FINANCIAL will be
transferred no later than thirty (30) days after the effective date of this
Agreement.
23. COMMERCIAL PRODUCTION OF DESIGNATED PRODUCT
23.1 PDS FINANCIAL shall have responsibility for production of
Designated Product produced under this Agreement.
23.2 Facilities and production equipment used by PDS FINANCIAL to
produce Designated Product will be at the cost of PDS FINANCIAL and determined
by PDS FINANCIAL. The facilities and production equipment used by PDS FINANCIAL
must produce Designated Product which is of acceptable quality to DIGIDEAL.
23.3 PDS FINANCIAL will take components provided by DIGIDEAL or third
party suppliers appointed or selected by DIGIDEAL and assemble, manufacture,
program, test and otherwise prepare and package the Designated Product for
distribution to casinos or other customers.
23.4 PDS FINANCIAL shall pay DIGIDEAL for all components billed by
DIGIDEAL to PDS FINANCIAL within ten (10) days of receipt of the components by
PDS FINANCIAL. Such shall be shipped f.o.b. Spokane, Washington.
24. COMPONENTS USED IN PRODUCTION OF DESIGNATED PRODUCT
24.1 Components used in the Designated Product shall be supplied
by DIGIDEAL or as mutually agreed by DIGIDEAL and PDS FINANCIAL.
24.2 If DIGIDEAL and PDS FINANCIAL agree that PDS FINANCIAL will supply
components for the Designated Product, then a price will be agreed to and used
in determining the costs of production for the Designated Product.
24.3 If DIGIDEAL decides to have components to be supplied to PDS
FINANCIAL by third party suppliers in lieu of from DIGIDEAL, then the quality of
components supplied by such third party suppliers shall be acceptable to and
Page 13 of 38
approved by PDS FINANCIAL. Any components supplied by third party suppliers
shall be billed through DIGIDEAL or as otherwise authorized by DIGIDEAL.
DIGIDEAL shall use best efforts to supply components in a timely manner.
25. COSTS OF PRODUCTION FOR DESIGNATED PRODUCT
25.1 PDS FINANCIAL will have actual and direct costs of production in
assembling and manufacturing Designated Product. It is expected that the actual
and direct costs of production will be in the range of *** ($***) to *** ($***),
per Designated Product system. The actual and direct costs of production will be
determined by the actual costs of all components supplied to PDS FINANCIAL and
the agreed value of any components made by PDS FINANCIAL.
25.2 Also included in actual and direct costs of production are the
direct costs associated with assembling, packaging and shipping the Designated
Product. The actual and direct costs of production shall not include general
administration, space and facilities charges, installation and setup, and
overhead associated with PDS FINANCIAL's performance under this Agreement.
26. INSTALLATION AND SETUP OF DESIGNATED PRODUCT
26.1 PDS FINANCIAL will also have installation and setup costs
associated with work done either by PDS FINANCIAL or its sublicensee who is
performing installation and setup of the Designated Products.
26.2 Installation and setup costs are the actual costs of installation
and setup as is charged to PDS FINANCIAL by a sublicensee, or actual time spent
by employees of PDS FINANCIAL in performing these functions. Installation and
setup shall not include general and administrative expenses, space and
facilities charges, or other overhead.
27. INITIAL CHARGES
27.1 The allowed costs of PDS FINANCIAL for actual and direct costs of
production and for installation and setup will herein be termed the initial
charges. The initial charges represent the marginal costs of production,
installation, and warranty for parts (for one year). They do not include
administrative, sales, marketing, non-specific distribution costs, or servicing
costs. Freight is not an initial charge and shall be paid by PDS FINANCIAL.
27.2 If DIGIDEAL supplies components or arranges for the supply of
components to PDS FINANCIAL for use in the Designated Products, then DIGIDEAL
shall be allowed a vendor management fee equal to ten percent (10%) of the costs
***Confidential treatment requested pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
Page 14 of 38
paid by PDS FINANCIAL. Such vendor management fee shall be deducted prior to
determining the allowable initial charges.
28. REVENUE FROM RENTALS AND SALES
28.1 PDS FINANCIAL or any authorized licensees or sublicensees shall
then place the Designated Product with casinos or other users who shall pay
rentals or purchase the units.
28.2 The parties contemplate that rentals for the Designated Product
will be in the range of *** ($*** U.S.) to *** Dollars ($*** U.S.) per month. If
pricing is less than this range, then it shall be agreed by both parties.
28.3 The rentals, sales revenue or other revenue received from the
Designated Product shall be first used by PDS FINANCIAL to recoup the allowed
initial charges as described in part 27.1. In addition to the allowed initial
charges PDS FINANCIAL shall also be allowed a marketing and setup allowance
equal to Five Hundred Dollars ($500.00) per Designated Product. Any rentals,
purchase revenues, or other revenue received thereafter shall be ***. Any
agreement between PDS FINANCIAL and any licensee or sublicensees shall not
reduce the amount received by DIGIDEAL which will remain the same no matter what
licensing or sublicensing PDS FINANCIAL may choose to employ or not employ in
furtherance of its obligations and responsibilities under this Agreement.
28.4 The rental or sales revenue received in connection with Designated
Product shall be measured as the true price paid by the user, e.g. casino or
other user. This applies whether PDS FINANCIAL has appointed any licensee or
sublicensee who is between or in any manner receives revenue from the sale or
rental of Designated Product.
29. HANDLING OF REVENUE FROM DESIGNATED PRODUCTS
29.1 PDS FINANCIAL shall provide any needed billing of customers for
the rental and sales revenue, and receive payments constituting the revenue from
rents, sales or other revenue or proceeds from Designated Product placed by PDS
FINANCIAL or its licensees.
29.2 PDS FINANCIAL shall deposit DIGIDEAL's share of such rents in an
escrow account within ten (10) days from the time PDS FINANCIAL receives any
such payments.
30. REPORTING OF REVENUE AND DESIGNATED PRODUCTS
30.1 PDS FINANCIAL shall account in writing for all receipts of revenue
and any refunds of revenue in a regular accounting report to DIGIDEAL which
shall be done at least once per calendar month, or on a more frequent basis if
PDS FINANCIAL desires. The regular accounting reports shall list all Designated
Product which have been manufactured by PDS FINANCIAL since the last regular
Page 15 of 38
accounting report. It will also show all Designated Product which has been
placed for rental and the amount of revenue billed and the revenues actually
received on each Designated Product, or group of Designated Product if
multiple systems are at one facility. Such regular accounting report shall
also show all sales which have
***Confidential treatment requested pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
Page 16 of 38
been made and the sale prices agreed to, amounts billed and amounts actually
received as revenue in connection with such sales. The regular accounting
report will also show all Designated Product which has been returned, either
as returned rentals or returned sales. Such monthly accounting report shall
identify the Designated Product by serial number and indicate the place of
location, the organization or person who is in possession of the Designated
Product and the agreed rental rate. Still further the accounting will
indicate the actual initial charge associated with each Designated Product
listed and the amount of rent which has previously been recovered and the
amount of any setoff which has been taken by PDS FINANCIAL in connection with
recovery of the initial charge.
30.2 DIGIDEAL's share of all rental and sales revenue received by PDS
FINANCIAL shall be kept separate from regular operating expenses of PDS
FINANCIAL until paid out to DIGIDEAL. Payments to DIGIDEAL shall be accompanied
with a regular accounting report which has been prepared accounting for all
funds owed to DIGIDEAL and showing the payments made and the associated rents
and sales receipts for which the payments to DIGIDEAL are being made.
30.3 The regular accounting report and payments to DIGIDEAL and PDS
FINANCIAL shall be made no later than the fifteenth (15th) day of the month
immediately following the calendar month for which the accounting report covers
the transactions.
30.4 Rent received by PDS FINANCIAL will first be used as authorized
herein to satisfy initial charges, until the full amount of the initial charge
is recovered by PDS FINANCIAL. After PDS FINANCIAL has recovered the initial
charge, then one-half of all revenue received will be paid to DIGIDEAL and
one-half shall be paid to PDS FINANCIAL. Revenue shall be measured at the
customer level, e.g. casino or other user's amount of charge and shall not be
diminished to cover the fees associated with the activities of licensees or
sublicensees.
31. OTHER TYPES OF REVENUE
31.1 Revenue from sales or rentals compensated for in a fashion other
than monetary payment, franchise fees, sublicensing fees or other revenue or
value received by PDS FINANCIAL in connection with distribution of Designated
Product shall be treated in the same manner as rent.
Page 17 of 38
31.2 If sales are made on an installment basis, then the installment
payments are treated similar to rental payments. Payments on sales are
considered made when received by PDS FINANCIAL and are handled in a similar
fashion as specified with regard to rent payments.
32. OWNERSHIP OF DESIGNATED PRODUCT
32.1 If Designated Product is rented, then the Designated Product shall
be owned by PDS FINANCIAL.
32.2 The disposition, retirement, remanufacture or other use of
Designated Product returned from rental use shall be determined by PDS
FINANCIAL.
32.3 The disposition, retirement, remanufacture or other use of
Designated Product returned from a purchase customer shall be determined by PDS
FINANCIAL.
32.4 Designated Product which is sold to customers shall be owned by
the purchasing customer or a subsequent purchaser unless returned to PDS
FINANCIAL.
33. CURRENCY AND MONEY
All monetary amounts specified in this Agreement are in United States
Dollars.
34. ACCOUNTING AUDITS
34.1 DIGIDEAL shall have the right to inspect with three (3) business
days prior notice, the records of PDS FINANCIAL and all licensees or
sublicensees which are relevant to indicate the amount of rental revenue, sales
revenue, or other compensation which is owed to DIGIDEAL or otherwise to be paid
in connection with this Agreement.
34.2 DIGIDEAL shall also have the right to inspect the records of PDS
FINANCIAL and all licensees or sublicensees which are relevant to the quality of
Designated Product produced by or for PDS FINANCIAL and all licensees or
sublicensees.
34.3 The rights to inspect indicated herein include the right to have
an audit conducted by an appropriate auditing or accounting firm. If an audit
indicates that PDS FINANCIAL has failed to pay amounts rightfully owed to
DIGIDEAL due to careless or inappropriate behavior or accounting, then the cost
of the audit shall be fully paid by PDS FINANCIAL or the licensee or sublicensee
who owes such amount.
34.4 The parties hereto agree that there may be a yearly audit
conducted at DIGIDEAL's request for purposes of confirming the amounts owed
DIGIDEAL in
Page 18 of 38
connection with this Agreement. The parties will share equally in bearing the
costs of such a yearly audit.
35. SALES VERSUS RENTALS
35.1 The parties hereto contemplate and it is their stated intent that
most or all placement of Designated Products will occur on a rental basis.
35.2 The parties hereto also recognize that in some jurisdictions there
may be applicable regulations which prohibit or render impractical the rental of
Designated Products, and therefore agree that PDS FINANCIAL can engage in direct
sale of Designated Products to casinos or other users.
35.3 The decision whether to rent or sell Designated Product is
determined by PDS FINANCIAL.
36. SUBLICENSING
36.1 Any licenses or sublicenses granted hereunder shall be limited to
the scope of rights and privileges granted to PDS FINANCIAL and subject to the
same terms, conditions and obligations.
36.2 PDS FINANCIAL shall not enter into any agreement with any
purported or actual licensee or sublicensee which fails to include clear and
specific language indicating all limitations imposed upon PDS FINANCIAL under
this Agreement as it affects the rights to be exercised by any such licensee or
sublicensee.
36.3 If PDS FINANCIAL receives monetary or other remuneration or value
in addition to or lieu of rental fees or sales revenue in connection with
manufacture and distribution of Designated Products, then PDS FINANCIAL shall
report such revenue and it shall be treated in the same manner as rental
revenue. This shall also apply to any franchise fees or other fees paid by any
licensee or sublicensee for the right to perform under this Agreement.
36.4 If PDS FINANCIAL delegates any responsibilities under this
Agreement to a licensee or sublicensee, then the monetary effect of any such
delegation will not diminish the revenue which DIGIDEAL would otherwise have
received if the delegation had not occurred and PDS FINANCIAL instead performed
directly under this Agreement.
36.5 Any licensee or sublicensee authorized by PDS FINANCIAL shall
be obligated to make payments as specified herein the same as obligations of
PDS FINANCIAL in connection with any revenue which is reportable under part
15, 16. All licenses or sublicenses shall include provisions so obligating
the licensees or sublicensees. If any such licensee or sublicensee receives
benefits under or equivalent to those granted to PDS FINANCIAL, and PDS
FINANCIAL fails to pay, then the licensee or sublicensee receiving such
benefits shall pay the obligation. Any licensee or sublicensee shall also be
obligated to report the information specified in part 15, 16 with respect to
the activities of PDS FINANCIAL which have
Page 19 of 38
been delegated to such licensee or sublicensee and the written agreements
between PDS FINANCIAL and any such licensee or sublicensee shall so provide.
Any such licensee or sublicensee shall only be obligated with respect to the
obligations or benefits received by that licensee or sublicensee and not
obligations or benefits granted to other licensees or sublicensees or
portions retained by PDS FINANCIAL.
36.6 The obligation of PDS FINANCIAL to make payments pursuant to
sections 16 and 25 shall not and cannot be delegated or become the
responsibility of any licensee or sublicensee.
37. CERTIFYING AND LICENSING OF DESIGNATED PRODUCTS
37.1 PDS FINANCIAL shall submit Designated Product developed hereunder
to any applicable gaming commission or testing laboratory as needed to gain
approval, licensing, or other certification as required or deemed desirable
prior to placement of the Designated Products for rental or sale, if such is
required. Exemplary authorities in either: a) the state of Nevada, or b) the
states of New Jersey and Mississippi, or Gaming Laboratories International
(individually, "Certifying Authority", collectively, "Certifying Authorities").
37.2 PDS FINANCIAL shall incur all costs of licensing and certification
of the Designated Product.
37.3 PDS FINANCIAL and DIGIDEAL will cooperate as needed to overcome
any requirements imposed by a gaming commission or other regulatory authority
having jurisdiction over the manufacture or distribution of Designated Products.
37.4 Notwithstanding any other provision in this Agreement to the
contrary, PDS FINANCIAL may terminate this Agreement at any time without further
obligation or liability to DIGIDEAL if, in the judgment of PDS FINANCIAL's
Compliance Committee, the relationship with DIGIDEAL or DIGIDEAL's principals
could subject PDS FINANCIAL to disciplinary action or cause PDS FINANCIAL to
lose or become unable to obtain or reinstate any federal, state and/or foreign
registration, license or approval material to PDS FINANCIAL 's business or the
business of any PDS FINANCIAL subsidiary.
37.5 It is the intention, understanding and belief of the parties that
the Designated Product shall be considered as associated equipment by the
applicable gaming authorities in the respective Designated Territories (as
defined by each Designated Territory's gaming act and/or regulations) where the
Designated Product is submitted for regulatory approval. In the event that the
applicable gaming authorities of a Designated Territory classify, categorize,
declare or opine (formerly or informally) that the Designated Product is a
gaming device, gambling device, electronic gaming device or device of similar
nature (as defined by the respective Designated Territory's gaming act and/or
regulations) thereby imposing more stringent restrictions and/or requirements on
the approval
Page 20 of 38
of the Designated Product for that particular Designated Territory, the
parties agree that this Agreement shall be amended, modified, replaced or
terminated in order to accomplish the objectives of the parties as
contemplated herein. The parties agree to cooperate with one another and use
their best efforts to restructure this Agreement in a manner that will be
found acceptable by any applicable gaming authorities expressing objections
or concerns.
38. LICENSING WITH INDIAN TRIBES
38.1 PDS FINANCIAL will be responsible for employing or hiring a
compliance director who will have responsibility for gaining or coordinating
licensing for both PDS FINANCIAL and the Designated Product by the various
tribal gaming commissions or other applicable gaming authorities who are
empowered to regulate manufacture, distribution, placement, servicing, repair
and use of the Designated Product in the jurisdictions included within the
Designated Territories.
38.2 PDS FINANCIAL shall incur all costs for licensing of PDS FINANCIAL
as a manufacturer, distributor or other function provided for in this Agreement
as required by the Certifying Authorities. PDS FINANCIAL will pay all fees
charged by the gaming authorities with regard to gaining licensing of PDS
FINANCIAL or Designated Product. In the event it is determined that DIGIDEAL
must be licensed in any or all jurisdictions, DIGIDEAL shall bear all such
costs.
38.3 PDS FINANCIAL shall keep DIGIDEAL reasonably apprised of official
actions and significant communications to and from Certifying Authorities
concerning licensing of PDS FINANCIAL or Designated Product.
38.4 If DIGIDEAL undertakes any efforts in the nature of submission or
seeking approval from Gaming Laboratories, Inc. with regard to use, manufacture
or sale of the Designated Product within the United States of America, then to
the extent such effort by DIGIDEAL can be used to facilitate PDS FINANCIAL'S
activities under this Agreement, Digideal agrees to make such information
available to PDS FINANCIAL for aiding of the efforts to obtain approvals
39. INSTALLATION, SERVICING AND MAINTENANCE OF DESIGNATED PRODUCT
39.1 Designated Product which has been placed for rent or sold will be
installed by PDS FINANCIAL or a licensee or sublicensee appointed by PDS
FINANCIAL.
39.2 PDS FINANCIAL will also perform servicing, maintenance and repair
of Designated Product to maintain the Designated Product in normal and
satisfactory operation. PDS FINANCIAL also has the option of training personnel
of a casino or other user of the Designated Products to provide servicing and
maintenance thereof.
Page 21 of 38
39.3 PDS FINANCIAL agrees to maintain an adequate number of repair
facilities to adequately service the Designated Product, and in any case at
least one repair facility for servicing and maintenance of Designated Product.
39.4 PDS FINANCIAL also agrees to maintain an inventory of spare parts
as needed to fulfill the intended maintenance to be performed by PDS FINANCIAL.
40. TECHNICAL SUPPORT AND REIMBURSEMENT FOR EXPENSES
40.1 Digideal will make available to PDS FINANCIAL technical support
at PDS FINANCIAL's request.
40.2 PDS FINANCIAL will bear all costs for any such services,
including travel and other expenses incurred in providing such services.
41. CONFIDENTIALITY OF DISCLOSURE AND DESIGNATED TECHNOLOGY
41.1 PDS FINANCIAL agrees that all disclosure from DIGIDEAL to PDS
FINANCIAL under this Agreement is done in confidence except for the information
contained in The Patents which issue or are published, effective upon the date
of issuance or date of publication. All materials embodying Designated
Technology shall be maintained in confidence as a trade secret and not disclosed
except as expressly allowed in this Agreement. Incidental writings and
information included in the materials describing and disclosing Designated
Technology are not bound to secrecy and nondisclosure if such writings and
information are generally known in the trade or if such writings or information
later become generally known in the trade or to the public through no fault of
PDS FINANCIAL, and such writings and information do not contain confidential
information concerning the Designated Technology.
41.2 Both parties agree that the other party can disclose confidential
information contained in the Designated Technology to: gaming regulatory
agencies needing information in connection with obtaining and complying with
regulations under their jurisdiction, licensees, sublicensees, investors,
financial institutions who are considering loans or investments in the other
party. The third parties who are to receive such information will agree to
receive such information in confidence, to maintain the secrecy thereof, and to
not disclose the content of such information, under at least the same or similar
conditions as described above with respect to PDS FINANCIAL.
41.3 Both parties agree to mark all materials which include
confidential information relating to the Designated Technology and that said
materials shall be marked "Proprietary", "Confidential", "Secret", or with words
of similar meaning.
42. RESERVED
43. RESERVED
Page 22 of 38
44. PATENT APPLICATIONS
44.1 RIGHTS TO FILE - DIGIDEAL shall have the right to have
applications for patents, utility models, design patents and similar forms of
legal protection (hereinafter collectively referred to as "patents") filed on
all patentable inventions or otherwise protectible interests contained within
the Designated Technology. This applies equally to original applications and any
foreign or domestic derivative applications directed to Designated Technology.
44.2 PROSECUTION - PDS FINANCIAL agrees that DIGIDEAL shall have
responsibility for preparing, filing and prosecuting any such patent
applications, and that all such work shall be done at DIGIDEAL's expense.
45. REGISTRATION OF LICENSE
If under the law of any jurisdiction within the Designated Territory,
the execution or registration of any registered user or similar agreement in
respect of any of the Patents or Designated Technology is required or permitted
in order for PDS FINANCIAL to obtain the full benefit of this Agreement, PDS
FINANCIAL may, at its own cost and expense, register this Agreement or execute
or register the appropriate registered user or similar agreement in order that
PDS FINANCIAL shall obtain such full benefits. If the registration of this
Agreement is not required, but instead optional or of beneficially effect, then
no registration shall occur without the written agreement of DIGIDEAL.
46. MINIMUM PERFORMANCE BY PDS FINANCIAL
46.1 PDS FINANCIAL shall under any and all circumstances achieve
commercial distribution of Designated Product by fifteen (15) months after the
effective date of this Agreement. If commercial distribution has not occurred by
within such period, then this Agreement shall automatically terminate upon
notice but without any opportunity to cure and without any period to cure this
deficiency. Automatic termination under this provision shall otherwise be
subject to the termination provisions of this Agreement.
46.2 PDS FINANCIAL shall produce results in effecting rental, sale or
other revenue associated with Designated Product which gives rise to payment of
revenue to DIGIDEAL according to the schedule below. Failure by PDS FINANCIAL to
achieve revenue for the specified number of Designated Products shall be deemed
a material breach of the contract and shall justify DIGIDEAL in termination
under part 62.
46.3 PDS FINANCIAL shall have Designated Product placed and generating
rental or sales revenue during the specified periods, for at least the following
number of systems of the Designated Product. A Designated Product system will
count in meeting the following requirements if the Designated Product
Page 23
has either been sold during the minimum performance accounting period or if the
system is in place generating revenue at the end of the minimum performance
accounting period.
(a) For the period calendar year 2000, at least 100 systems.
(b) For the period calendar year 2001, at least 250 systems.
(c) For the period calendar year 2002, at least 450 systems.
(d) For the period calendar year 2003, at least 650 systems.
(e) For the period calendar year 2004, at least 750 systems.
46.4 Should PDS FINANCIAL fail to rent and sell the minimum units
described above, then DIGIDEAL shall, at its sole discretion, have the option to
either a) terminate this Agreement, or b) convert PDS Financial's rights
hereunder so that all rights are non-exclusive.
47. IMPROVEMENTS AND DEVELOPMENTS IN DESIGNATED TECHNOLOGY
47.1 IMPROVEMENTS BY DIGIDEAL - Improvements, enhancements and
additional inventions relating to the Designated Technology by DIGIDEAL
(hereinafter "DIGIDEAL Improvements") shall not be considered within the scope
of Designated Technology unless such falls within the scope of The Patents
specifically enumerated in part 3.1, 3.2, 3.3, 3.4 and 3.5. PDS FINANCIAL shall
have the same rights and obligations with respect to such DIGIDEAL Improvements,
starting with the date of actual disclosure to PDS FINANCIAL, as applies to
Designated Technology in general under this Agreement. Patent applications on
any DIGIDEAL Improvements shall be handled as indicated in part 44.
47.2 IMPROVEMENTS BY PDS FINANCIAL - Improvements, enhancements and
additional inventions relating to the Designated Technology by employees of PDS
FINANCIAL (hereinafter "PDS FINANCIAL Improvements"), shall be disclosed to
DIGIDEAL within three (3) months of discovery. All rights of any nature or type
in any improvements shall initially revert to PDS FINANCIAL. If such
improvements fall within the scope of The Patents then DIGIDEAL shall have an
option to repurchase under the same terms and conditions as provided for in
section 9. PDS FINANCIAL shall be responsible for filing any patent applications
on improvements made by PDS FINANCIAL or its licensees or sublicensees. If
DIGIDEAL exercises its option to repurchase in connection with any improvements
made by PDS FINANCIAL, or its licensees or sublicensees, then PDS FINANCIAL
employees shall provide DIGIDEAL reasonable assistance and cooperation as is
necessary to allow DIGIDEAL to file or further pursue any patent applications on
PDS FINANCIAL Improvements.
47.3 IMPROVEMENTS BY LICENSEE OR SUBLICENSEES - Improvements,
enhancements and additional inventions relating to the Designated Technology by
employees of any licensee or sublicensee (hereinafter "Licensee or Sublicensee
Improvements"), shall be governed by the sublicense under which the licensee or
sublicensee is licensed. However, as a minimum, all licensees or sublicensees
must agree to disclose all such Licensee or Sublicensee Improvements to PDS
Page 24
FINANCIAL within one (1) month of discovery. PDS FINANCIAL agrees to disclose
any such Licensee or Sublicensee Improvements to DIGIDEAL within one (1) month
of disclosure by a licensee or sublicensee to PDS FINANCIAL. Any patent
applications or patents on Licensee or Sublicensee Improvements shall be handled
in the same manner as if they are improvements by PDS FINANCIAL.
48. EMPLOYEE INVENTION AGREEMENTS
PDS FINANCIAL agrees that all PDS FINANCIAL employees, agents and
consultants given access to the Designated Technology shall sign a
confidentiality agreement and invention assignment agreement whereby any
improvements, enhancements and new inventions relating to the Designated
Technology are required to be disclosed and assigned to DIGIDEAL, or to PDS
FINANCIAL and PDS FINANCIAL shall reassign such to DIGIDEAL if required by the
provisions of part 47.
49. MARKING OF PRODUCTS EMBODYING PATENT RIGHTS AND COPYRIGHTS
49.1 PDS FINANCIAL and DIGIDEAL agree that all products and equipment
sold, leased or distributed hereunder which is within the scope of any claim
issued in a U.S. or foreign patent shall be marked with one or more patent
numbers or other notices in a manner consistent with and as required by the laws
of the jurisdiction in which the products and equipment are to be sold or
otherwise used or distributed. Failure to so mark all patented products and
equipment will subject PDS FINANCIAL to liability to DIGIDEAL for losses
associated with such failure to mark.
49.2 PDS FINANCIAL and DIGIDEAL also agree to mark all reproductions,
copies and derivative works based on The Copyright Works with notice of the
claim to copyrights as required to fully protect The Copyright Works under the
laws of the jurisdiction in which the reproductions, copies or derivative works
are to be sold or distributed.
49.3 The provisions of this part shall apply to licensee or
sublicensees and all sublicenses shall so provide.
49.4 PDS FINANCIAL and DIGIDEAL agree to indicate DIGIDEAL's invention
of Designated Products and trademark rights in promotional and advertising
materials, and on the Designated Products.
50. ASSIGNMENT AND OWNERSHIP
50.1 Because of the nature of rights and obligations granted hereunder,
neither DIGIDEAL nor PDS FINANCIAL can assign any rights or obligations under
this Agreement unless the proposing assignor has received written authorization
from the other party.
50.2 The limitations on assignment of right or obligations provided for
in the previous paragraph shall not prevent either PDS FINANCIAL or DIGIDEAL
from
Page 25
assigning such rights and obligations as part of the sale of all or
substantially all of these parties respective businesses. The possible
assignment of rights provided for in this paragraph is only exercisable if
the assigning party's obligations will not be materially derogated by the
planned assignment. The assigning party must notify the other non-assigning
party at least two (2) months before the planned assignment will be
effective. The non-assigning party can object to a proposed assignment within
one month after being actually notified. Any objection must be submitted in a
written objection communicated to the assigning party in a manner similar to
notices of breach. The proposed assignment will then be submitted to binding
arbitration in accordance with the provisions of part 78.
51. WARRANTIES OF DIGIDEAL
51.1 DIGIDEAL makes only the warranties expressly made below.
(a) DIGIDEAL warrants that neither DIGIDEAL nor any of its
corporate officers has information indicating that the subject matter
of The Patents infringes any U.S. or foreign patents.
(b) DIGIDEAL makes no other warranties.
52. DISCLAIMER OF WARRANTIES BY DIGIDEAL
52.1 DIGIDEAL hereby disclaims all warranties not expressly made herein
and further specifically disclaims as set forth below.
(a) No warranty or representation is made that practice of the
Designated Technology by PDS FINANCIAL or its licensee or sublicensees
as allowed under this Agreement will not infringe upon patent or
trademark rights of a third party now unknown to DIGIDEAL and/or PDS
FINANCIAL.
(b) No warranty or representation is made that patent
protection will necessarily be obtained on the Designated Technology.
(c) No warranty is made to indemnify PDS FINANCIAL for any
claims arising from DIGIDEAL's activities under this Agreement.
53. WARRANTIES OF PDS FINANCIAL
53.1 PDS FINANCIAL makes only the warranties expressly made below.
(a) PDS FINANCIAL warrants that neither PDS FINANCIAL nor any
of its corporate officers has information indicating that the subject
matter of The Patents infringes any U.S. or foreign patents.
(b) PDS FINANCIAL warrants that it will attempt to obtain
licensing by state gaming authorities enabling PDS FINANCIAL to perform
rental or sales of Designated Product in at least the states of Nevada,
Mississippi, and New Jersey by the end of calendar year 2002.
(c) PDS FINANCIAL makes no other warranties.
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54. DISCLAIMER OF WARRANTIES BY PDS FINANCIAL
54.1 PDS FINANCIAL hereby disclaims all warranties not expressly made
herein and further specifically disclaims as set forth below.
(a) No warranty or representation is made that practice of the
Designated Technology by PDS FINANCIAL or its licensee or sublicensees
as allowed under this Agreement will not infringe upon patent or
trademark rights of a third party now unknown to DIGIDEAL and/or PDS
FINANCIAL.
(b) No warranty or representation will be made that patent
protection will necessarily be obtained on the Designated Technology.
(c) No warranty is made to indemnify DIGIDEAL for any claims
arising from PDS FINANCIAL's activities under this Agreement.
55. ENFORCEMENT OF PATENT AND OTHER EXCLUSIVE RIGHTS AGAINST INFRINGERS
55.1 PDS FINANCIAL shall be primarily responsible for enforcing any
patent or other exclusive rights in the Designated Technology against infringers
thereof. PDS FINANCIAL shall not be obligated to institute legal proceedings for
infringement.
55.2 DIGIDEAL is empowered to file legal actions or otherwise
enforce any of the exclusive rights contained in The Designated Technology if
such rights are owned by DIGIDEAL, or if PDS FINANCIAL has decided against
taking enforcement action against infringers and the exclusive rights are
owned by PDS FINANCIAL. DIGIDEAL shall not be obligated to institute legal
proceedings for infringement.
55.3 If DIGIDEAL and PDS FINANCIAL agree to cooperatively institute
legal action against some third party for infringement of the Designated
Technology, then each shall share equally in the costs of litigation. Any
recovery under such legal actions shall be divided between PDS FINANCIAL and
DIGIDEAL between the parties based upon their relative payment of the total
litigation costs.
55.4 If either DIGIDEAL or PDS FINANCIAL do not institute legal action
for infringement, then the other may at its election sue for infringement or
other cause, except no such action will be taken if the owner of the patent
objects to the institution of legal action concerning a patent it owns. Any
recovery under such legal actions shall be solely the property of the party
pursuing the lawsuit.
56. NOTIFICATION OF INFRINGEMENT
PDS FINANCIAL and DIGIDEAL both agree to notify the other within ten
(10) days of becoming aware of any infringement of Designated Technology by
third parties.
57. CLAIMS FROM THIRD PARTIES
Page 27
57.1 Notwithstanding the provision of part 57 of the Original
Agreement, the parties hereto hereby modify such provisions and agree that if
any third party takes legal action or otherwise makes or asserts a claim against
either of the parties to this agreement, and such action, assertion or claim is
based upon infringement of any patent, trademark or copyright associated with
the Designated Product, Designated Trademarks, The Copyright Works, or other
proprietary right licensed or conveyed under the terms of the Original
Agreement; then the following provisions shall apply. For convenience, any such
action, assertion or claim shall be referred to below as a "third party
infringement claim".
57.2 The parties agree to cooperate in defending, settling or otherwise
resolving any third party infringement claim.
57.3 All costs of defending against any third party infringement claim
shall be equally divided between the parties.
57.4 Costs of defending against any third party infringement claim
shall include monetary outlays for court costs, lawyers fees, investigation
costs, costs of depositions, copy costs incurred in connection with a lawsuit,
and other monetary outlay costs incurred because of actions taken in connection
with the third party infringement claim.
57.5 Costs of defending against any third party infringement claim
shall not include labor or employment costs and associated taxes for any
employee of either party unless there is specific further agreement that such
employee costs shall be shared under the terms of this modification and the
Original Agreement. Also excluded are costs of consultants normally employed by
either party in connection with the party's regular business, unless agreed by
the parties or unless the consultant's fees are specifically charged in
connection with services provided in defending against the third party
infringement claim. Management consultants shall be considered the same as
employees for purposes of determining whether their service fees are considered
costs of defending against any third party claims.
57.6 Any recovery to either party resulting from any third party
infringement claim, such as a favorable ruling upon a counterclaim, shall first
be used to pay unpaid costs incurred by both parties in connection with the
third party infringement claim. Thereafter the parties shall be reimbursed to
the extent that the costs of defending have not been borne equally. Thereafter
the recovery shall be divided equally or in a manner sufficient to provide equal
treatment of the parties with respect to costs and recovery in connection with
the third party infringement claim.
57.7 The provisions of this modification agreement shall not apply to
counterclaims filed by either party which are not within the definition or
subject matter of a third party infringement claim as defined hereinabove,
unless there is agreement in writing between the parties that such a
counterclaim is governed by the provisions of this modification.
57.8 If any provision of the Original Agreement is inconsistent with
the terms of this modification, then the provision contained herein shall
govern.
57.9 Each party shall give the other prompt notice in writing of any
claim of infringement made known to it or the threat of any such claim.
Page 28
58. COVENANTS NOT TO COMPETE
58.1 PDS FINANCIAL recognizes that DIGIDEAL has created the Designated
Technology and agrees that proprietary information is being conveyed to PDS
FINANCIAL in connection with the ongoing business relationship evidenced by this
Agreement. If PDS FINANCIAL's rights under this Agreement cease, then PDS
FINANCIAL agrees to not compete with DIGIDEAL or DIGIDEAL's authorized
distributor of the Designated Technology with regard to sale or rental of the
Designated Product. Such agreement not to compete applies for a period of two
(2) years from the discontinuation of PDS FINANCIAL's rights under this
Agreement or one (1) year after receipt by DIGIDEAL of all payments owed by PDS
FINANCIAL under this Agreement, whichever is later. This applies whether such
termination is by action of DIGIDEAL or voluntary action of PDS FINANCIAL. The
covenant to not compete applies worldwide.
58.2 PDS FINANCIAL further agrees to discontinue any use of any
confidential information of Digideal's for a period of at least five (5) years
from the discontinuation of PDS FINANCIAL's rights under this Agreement. Any use
of DIGIDEAL's proprietary information shall only occur thereafter if such
proprietary information has entered into the public domain. If such information
is not in the public domain then PDS FINANCIAL shall make no use of DIGIDEAL's
confidential information whatsoever.
58.3 DIGIDEAL has employees, and is collaborating with outside
technical consultants, both of which will be working to transfer technology to
PDS FINANCIAL in connection with development of the Designated Product. In
continued development and commercialization of the Designated Product, PDS
FINANCIAL agrees not to employ any existing employee, or any employee of
DIGIDEAL hired hereafter, or consultant of DIGIDEAL without first receiving
authorization from DIGIDEAL. This limitation shall last for a period of three
(3) years after: a) the employee or consultant of DIGIDEAL leaves service of
DIGIDEAL, or b) leaves permissive service of PDS FINANCIAL if such service was
authorized by DIGIDEAL in furtherance of the Designated Product.
58.4 DIGIDEAL is developing other gaming products in addition to the
Designated Products. PDS FINANCIAL agrees not to produce products which are
competitive with other DIGIDEAL products for a period of two (2) years after the
termination of PDS FINANCIAL's rights under this Agreement. Products which are
competitive with other DIGIDEAL products shall include products produced by
DIGIDEAL or a third party authorized by DIGIDEAL, if such products fall within
the following definition:
Gaming systems which utilize automated electronically controlled visual
displays which during the play of games include display or cards or
symbols which are visually displayed by said visual
Page 29
displays, said gaming systems being adapted for play by at least one
dealer and at least one player who are physically present in a single
room to play a game using such cards or symbols.
59. COMPLIANCE WITH EXPORT OF TECHNOLOGY AND OTHER LAWS
PDS FINANCIAL agrees to comply with all U.S. and foreign government
statutes governing import and export of technological information, taxes and
other applicable laws. Since the technological information licensed hereunder is
initially subject to the laws of the United States, no disclosure to individuals
or organizations which constitutes a violation of the export of technology laws
or other U.S. or state statute of similar nature or effect, shall occur by PDS
FINANCIAL. Any further improvements or inventions which become part of the
Designated Technology shall similarly be controlled by U.S. law or the law of
any foreign nation in which such inventions or improvements are created, or as
otherwise made applicable under such U.S. or foreign law.
60. CONVERSION TO NON-EXCLUSIVE
60.1 If during the period of exclusivity and prior to transfer of
rights under part 7, PDS FINANCIAL fails to comply with the terms of this
Agreement, and such failure or failures are material breaches, then DIGIDEAL may
convert one or more of the exclusive rights granted to PDS FINANCIAL hereunder
into non-exclusive rights. Conversion shall also be possible if PDS FINANCIAL
becomes insolvent, bankrupt, fails to perform, or is for other reason unable to
effectively conduct business.
60.2 Such conversion shall be effected by DIGIDEAL sending a certified
letter, return receipt requested, containing a notice of default indicating the
failure or breach of this Agreement upon which conversion is to be based. PDS
FINANCIAL shall then have a thirty day period to prepare a plan which outlines
how the failure or breach will be rectified. DIGIDEAL will then indicate whether
DIGIDEAL believes the plan will rectify the failure or breach. PDS FINANCIAL
will have a cure period of three (3) months after DIGIDEAL states its position
concerning the plan during which to rectify the failure or breach. The three
month cure period will start on the date that PDS FINANCIAL receives the
position of DIGIDEAL in writing. If PDS FINANCIAL fails to cure within the cure
period, then conversion shall occur upon DIGIDEAL's mailing of a notice of
conversion after the expiration of the cure period.
61. EFFECT OF CONVERSION
61.1 Conversion shall not diminish PDS FINANCIAL's obligation to make
payments hereunder.
61.2 Conversion does not diminish DIGIDEAL's obligations hereunder
except that any exclusive rights previously held by PDS FINANCIAL are no longer
exclusive.
Page 30
61.3 Conversion of this Agreement from exclusive to non-exclusive
rights shall not change the status of licenses or sublicenses entered into by
PDS FINANCIAL in accordance with this Agreement, unless the licenses or
sublicenses are exclusive, in which case they shall become non-exclusive and
limited to the same extent as the licenses held after conversion by PDS
FINANCIAL.
61.4 Upon conversion PDS FINANCIAL is also limited and can no longer
negotiate new licenses or sublicenses under this Agreement unless authorized by
DIGIDEAL on a case-by-case basis and under terms agreeable to DIGIDEAL.
61.5 The option to repurchase rights under section 9 shall become
immediately exercisable upon conversion.
62. TERMINATION BY DIGIDEAL
62.1 If PDS FINANCIAL fails to comply with the terms of this Agreement,
and such failure or failures are significant and material breaches, then
DIGIDEAL may terminate this Agreement and the rights granted to PDS FINANCIAL
hereunder. Termination shall also be possible if PDS FINANCIAL becomes
insolvent, bankrupt, fails to perform, or is for other reason unable to conduct
business. Further, termination shall be possible if any key employee of PDS
FINANCIAL is convicted of a crime involving moral turpitude.
62.2 Without limitation being implied, it is agreed that the
significant provisions of the following aspects, sections or parts of this
Agreement are sufficient to warrant termination: all requirements to make
payments, 9, 37, 38, 39.1, 39.2, 41, 42, 34, 47, 50.
62.3 Termination shall be effected by DIGIDEAL sending a certified
letter, return receipt requested, containing a notice of default indicating the
failure or breach of this Agreement upon which termination is to be based. PDS
FINANCIAL shall then have a thirty day period to prepare a plan which outlines
how the failure or breach will be rectified. DIGIDEAL will then indicate whether
DIGIDEAL believes the plan will rectify the failure or breach. PDS FINANCIAL
will have a cure period of three (3) months after DIGIDEAL states its position
concerning the plan during which to rectify the failure or breach. The three
month cure period will start on the date that PDS FINANCIAL receives the
position of DIGIDEAL in writing. If PDS FINANCIAL fails to cure within the cure
period, then termination shall occur upon DIGIDEAL's mailing of a notice of
termination after the expiration of the cure period.
63. EFFECT OF TERMINATION BY DIGIDEAL
63.1 Upon termination, all rights of PDS FINANCIAL except for those
specifically indicated as continuing, shall terminate.
63.2 Termination shall not diminish PDS FINANCIAL's obligation to make
payments hereunder.
Page 31
63.3 Designated Product which is in the process of being sold shall
proceed to be sold and installed within a period of thirty (30) days. Sales
requiring delivery at a later time than this period shall only be pursued if
an agreement has already been entered into, or upon specific authorization from
DIGIDEAL.
63.4 Upon termination, PDS FINANCIAL shall no longer place any
additional Designated Product on rental, except with the specific authorization
of DIGIDEAL and under terms agreeable to DIGIDEAL.
63.5 PDS FINANCIAL shall continue to treat revenue in the same manner
after termination as prior to termination, except that PDS FINANCIAL shall have
no right to any revenue after PDS FINANCIAL fails to provide general customer
support, maintenance or repair services.
63.6 PDS FINANCIAL shall, if otherwise entitled, receive revenue under
this Agreement until the sooner of the following events:
(a) one (1) year after the date of termination;
(b) until the Designated Product is replaced;
(c) until the contract under which the Designated Product is
placed expires; or
(d) PDS FINANCIAL stops performing services as required under
this Agreement.
63.7 The option to repurchase rights under section 9 shall become
immediately exercisable upon termination and all rights under The Patents shall
be reconveyed or otherwise revert to DIGIDEAL.
63.8 Upon termination, all payments then owed shall become immediately
due and payable.
63.9 Upon termination, PDS FINANCIAL may continue to use previously
purchased repair parts and obtain additional repair parts as needed to continue
any servicing of customers. However, no refund or setoff for spare parts
purchased from DIGIDEAL will be made more than one (1) year after termination.
63.10 After termination of this Agreement, all rights granted herein
shall revert to DIGIDEAL who may assign or license others to use the Designated
Technology, Designated Trademarks, or The Copyrights.
63.11 Upon termination, PDS FINANCIAL agrees to stop all further use of
the Designated Technology and turn over to DIGIDEAL all materials which relate
to the Designated Technology. PDS FINANCIAL shall be responsible for any damages
caused by the unauthorized use of such materials or reproduction materials which
are not turned over. Any continued use by PDS FINANCIAL of materials concerning
Designated Technology shall be limited to servicing and repair of existing
rentals and be specifically authorized by DIGIDEAL.
63.12 All licenses and sublicenses entered into by PDS FINANCIAL will
be assigned or otherwise transferred to DIGIDEAL if PDS FINANCIAL's rights and
obligations under this Agreement are terminated, and DIGIDEAL shall accede to
all of PDS FINANCIAL's rights in and under the applicable licenses or
sublicenses.
Page 32
63.13 Upon termination, Designated Technology Rights, Designated
Trademark Rights or The Copyrights shall not be licensed or sublicensed without
the prior written approval of DIGIDEAL.
63.14 Termination does not diminish DIGIDEAL's obligations hereunder
for those obligations which related to any continued activity of PDS FINANCIAL
and are possible of being maintained after termination. Specific limitations and
time periods contained in other parts of this Agreement will apply to limit
obligations after termination.
64. TERMINATION BY PDS FINANCIAL
64.1 PDS FINANCIAL shall have the right to terminate this Agreement
for significant, material breaches by DIGIDEAL.
64.2 Termination shall be effected in a manner the same as or
consistent with the procedure set out in part 62.
64.3 The cure period applicable shall be thirty (30) days under all
parts relating to termination by PDS FINANCIAL.
65. EFFECT OF TERMINATION BY PDS FINANCIAL
65.1 Termination by PDS FINANCIAL shall result in the same effects of
termination as provided for in section 63.
65.2 Following termination by PDS FINANCIAL, DIGIDEAL shall have no
obligation to repay to PDS FINANCIAL any advances or payments paid by PDS
FINANCIAL under this Agreement.
66. MODIFICATION OF AGREEMENT
No modification of this Agreement shall be valid or binding unless the
modification is executed in writing signed by all parties to this Agreement.
67. NO WAIVER
No waiver by either party of a breach or a default hereunder shall be
deemed a waiver by such party of a subsequent breach or default of a like or
similar nature.
68. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other term or
provision of this Agreement and shall be interpreted and construed as if such
term or provision, to the extent the same shall have been held to be invalid,
illegal, or unenforceable, had never been contained herein.
Page 33
69. FORCE MAJEURE
If during the performance of obligations under this Agreement, either
party is prevented from performance on the basis of labor strike, natural
disaster, riot, war, or other causal force which was not reasonably foreseeable
or reasonably preventable, then failure by that party to meet its obligation to
perform shall be excused until such time as the cause preventing performance is
removed and the party can thereafter reasonably perform.
70. APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the
laws of the State of Nevada, United States of America.
71. JURISDICTION AND VENUE
The parties hereto agree that jurisdiction in Nevada and venue in Clark
County, Nevada shall be proper, and as otherwise provided for under law.
72. NOTICES
All notices required to be sent to either party shall be in writing and
sent by registered or certified mail, postage prepaid, return receipt requested,
or by telex or telegram, charges prepaid to the parties at the addresses given
hereinabove, or such future addresses as the parties shall designate in writing.
Notices can also be communicated by fax but are not considered effective unless
the party being notified confirms receipt of the fax in writing or by a return
fax indicating receipt of the notice previously sent by fax, or if the sender's
confirmation report indicates successful transmission to the other party, unless
the receiving party can prove the fax was not received. Payments can be sent by
first class mail.
73. RELATIONSHIP OF THE PARTIES
This Agreement does not create a partnership or joint venture between
the parties and neither party shall have any power to obligate or bind the other
in any manner whatsoever, except as specifically expressed in this Agreement.
74. ATTORNEY'S FEES
If either of the parties to this Agreement institute arbitration or
legal proceedings to enforce the terms of this Agreement, the parties agree that
the unsuccessful party to such arbitration or legal proceedings shall pay the
reasonable attorney's fees and legal costs of both parties, as the same may be
approved by the arbitrator or court having jurisdiction over such proceedings.
Page 34
75. INTEGRATION, ENTIRE AGREEMENT
This instrument constitutes the entire agreement between the parties.
Neither party shall be bound by any terms, conditions, understandings,
warranties, statements or representations, oral or written, not contained in
this Agreement. Both parties hereby acknowledge that the execution of this
Agreement was not induced or motivated by any promise or representation made by
any other party, other than the promises and representations expressly set forth
in this Agreement. All previous negotiations, statements, and preliminary
instruments by the parties or their representatives are merged into this
Agreement, except as expressly provided herein.
76. COUNTERPART ORIGINAL AGREEMENTS
This Agreement shall be executed in multiple original counterparts with
each party retaining one copy thereof.
77. EFFECTIVE DATE OF AGREEMENT AND TERM OF AGREEMENT
77.1 The effective date of this Agreement is the date as of which this
Agreement has been executed by all parties hereto.
77.2 This Agreement shall terminate when terminated by DIGIDEAL or PDS
FINANCIAL as provided in this Agreement. If neither party terminates this
Agreement as provided herein, then appropriate provisions of this Agreement
shall be applied until complete cessation of all use of The Patents, Designated
Trademarks, The Copyrights, and Designated Technology by PDS FINANCIAL or any
licensee or sublicensee, or until no further payments are due hereunder,
whichever is longer.
78. ARBITRATION
78.1 Any controversy or claim arising out of or relating to this
Agreement or the breach of any representation, warranty, covenant or agreement
contained herein, shall be decided by arbitration in accordance with the
Commercial Arbitration Rules ("C.A.R.") of the American Arbitration Association
("A.A.A.") then obtaining, unless the parties otherwise mutually agree in
writing. The dispute shall be decided by a panel of three arbitrators (each an
"Arbitrator" and collectively, the "Arbitrators") one arbitrator chosen by each
DIGIDEAL and PDS FINANCIAL, and the third by the two selected arbitrators in
accordance with C.A.R. and A.A.A. The decision and the award of damages rendered
by a majority of the Arbitrators shall be final and binding and judgment may be
entered upon it in any court having jurisdiction thereof.
78.2 The arbitration shall be held as promptly as practicable after
actual receipt of notice that the other party has filed a notice for arbitration
with the A.A.A. (the "Notice") on such a date, and at such a place and time
convenient to
Page 35
the parties and to the Arbitrators, except that if the parties cannot agree,
the Arbitrators shall decide such date, place and time. The Arbitrators shall
make their decision promptly and any award of damages shall be made, unless
otherwise mutually agreed by the parties in writing, no later than fifteen
(15) days from the date of closing of the hearings or if oral hearings have
been waived, from the date of transmitting the final statements and proofs to
the Arbitrators.
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79. EXECUTION BY DIGIDEAL - DIGIDEAL CORPORATION
Date: 9/2/99 By: /s/ MICHAEL J. KUHN
--------------------- --------------------------
Michael J. Kuhn, CEO
State of __________________ )
) ss
County of ________________ )
I certify that I know or have satisfactory evidence that ________ signed
this instrument, and upon oath acknowledged that he had authority to act in
behalf of DIGIDEAL Corporation and further acknowledged this instrument to be
the free and voluntary act of such party for the uses and purposes mentioned
in this instrument.
Dated: ___________________________ __________________________________________
Notary Public
Residing at ___________________________
[SEAL] My appointment expires: _______________
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80. EXECUTION BY PDS FINANCIAL - PDS FINANCIAL
Date: 9/1/99 By: /s/ PETER CLEARY
-----------------------------
Peter Cleary
President
PDS Financial
State of Nevada )
) ss
County of Clark )
I certify that I know or have satisfactory evidence that Peter Cleary
signed this instrument, and upon oath acknowledged that he had authority to act
in behalf of PDS FINANCIAL and further acknowledged this instrument to be the
free and voluntary act of such party for the uses and purposes mentioned in this
instrument.
Dated: 9/1/99 _______________________________________________________
Notary Public
Residing at _______________________
[SEAL] My appointment expires: ___________
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81. APPENDIX A - DESIGNATED TRADEMARKS
The Designated Trademarks at the time of execution include:
DIGITAL 21
DIGITAL CARD
DIGITAL CARDS
DIGIDEAL
DIGIDEALER
DIGITAL DEAL
DIGITAL DEALER
DIGITAL CARD SYSTEM
DCS
SLOTJACK
BONANZA BLACKJACK
82. APPENDIX B - EXEMPLARY MORTGAGE
MORTGAGE OF PATENT RIGHTS
PDS FINANCIAL does hereby mortgage and grant a security interest to
DIGIDEAL in the following pending patent applications and any patents resulting
therefrom. The mortgage and security interest granted hereby are used to secure
obligations arising under a certain agreement entitled, "AGREEMENT FOR
TECHNOLOGY TRANSFER, MANUFACTURE, DISTRIBUTION AND AFFECTING PATENT, TRADEMARK
AND COPYRIGHTS" executed between such parties on June 16, 1999 and as modified
in accordance with the terms of such agreement. PDS FINANCIAL agrees not to
sell, transfer, convey or otherwise encumber any of the patent rights secured by
this Mortgage unless agreed to in writing by DIGIDEAL or if done as authorized
in said agreement.
Signature
Notary certificate