EXHIBIT 10.1
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"CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS
DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION"
FIRST AMENDED AND RESTATED
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AMENDMENT AND TERMINATION AGREEMENT
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THIS FIRST AMENDED AND RESTATED AMENDMENT AND TERMINATION AGREEMENT
("Termination Agreement") is made on August 14, 2002 with an effective date of
May 3, 2002 ("Effective Date"), by and between PDS GAMING CORPORATION formerly
PDS Financial Corporation, a Minnesota corporation, its successors and assigns
("PDS"), whose address is 6171 McLeod Drive, Las Vegas, NV 89120-4048, and
DIGIDEAL CORPORATION, a Nevada corporation ("DigiDeal"), whose address is East
5207 Third Avenue, Spokane, WA 99212 (each a "Party" and collectively the
"Parties") and amends and restates that Amendment and Termination Agreement
dated May 3, 2002.
RECITALS
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WHEREAS, PDS and DigiDeal entered into that (i) CONSULTING AGREEMENT dated
August 3, 2001, as extended by agreement on November 26, 2001 ("Consulting
Agreement"); (ii) AMENDED AND RESTATED AGREEMENT FOR TECHNOLOGY TRANSFER,
MANUFACTURE, DISTRIBUTION AND AFFECTING PATENT, TRADEMARK AND COPYRIGHTS dated
September 7, 2001, as modified in that FIRST MODIFICATION OF AGREEMENT FOR
TECHNOLOGY TRANSFER, MANUFACTURE, DISTRIBUTION AND AFFECTING PATENT, TRADEMARK
AND COPYRIGHTS dated November 26, 2001 (collectively, the "Domestic Agreement");
(iii) AMENDED AND RESTATED AGREEMENT FOR TECHNOLOGY TRANSFER, MANUFACTURE,
DISTRIBUTION AND AFFECTING PATENT, TRADEMARK AND COPYRIGHTS (Sovereign Nations)
dated March 3, 2001, as modified in that FIRST MODIFICATION OF AGREEMENT FOR
TECHNOLOGY TRANSFER, MANUFACTURE, DISTRIBUTION AND AFFECTING PATENT, TRADEMARK
AND COPYRIGHTS dated November 26, 2001 (collectively, the "Tribal Agreement");
(iv) CONFIDENTIAL SOFTWARE LICENSE AGREEMENT dated August 31, 2000 ("Software
License Agreement"); (v) CONFIDENTIAL SOFTWARE TRANSFER AGREEMENT dated August
31, 2000 ("Software Transfer Agreement") (all such agreements, collectively, the
"Agreements"); and (vi) SUBSCRIPTION AGREEMENT dated November 21, 2001
("Subscription Agreement") ; and
WHEREAS, differences have arisen between the Parties regarding the
Agreements and the Subscription Agreement; and
WHEREAS, the parties have agreed that the Domestic Agreement and the Tribal
Agreement shall be amended and then terminated pursuant to the terms hereof; and
WHEREAS, the parties have agreed that the Subscription Agreement shall be
amended pursuant to the terms hereof; and
WHEREAS, the parties have agreed that the remaining Agreements shall be
terminated pursuant to the terms hereof; and
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SECURITIES AND EXCHANGE COMMISSION"
WHEREAS, the Parties desire to amicably resolve the pending differences
under the terms and conditions set forth in this Termination Agreement and those
other documents and instruments referenced herein.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and conditions set
forth herein and other good and valuable consideration, the sufficiency and
adequacy of which is hereby acknowledged by the Parties, it is agreed as
follows:
1. Recitals Incorporation. The recitals set forth above are hereby
incorporated into this Termination Agreement as material parts thereof and not
simply as mere recitals.
2. Previously Executed Instruments. The Parties agree that notwithstanding
the terms and conditions amended and/or restated herein, that the previously
executed Release and Mutually Termination Agreements, all dated May 3, 2002,
related to the Agreements described in the recitals set forth above, shall
remain in full force and effect and unaffected by this Termination Agreement.
3. Stock Purchase and Cash Payment.
a. Stock Purchase. As part of the overall termination of the
Agreements, PDS hereby agrees that upon execution of this Termination Agreement
it shall immediately execute the amended Subscription Agreement attached hereto
as Exhibit "1." and purchase One Hundred Eight Thousand One Hundred Eight
(108,108) shares of common stock of DigiDeal (the "Shares") at a price of $1.85
per share for a total cost of Two Hundred Thousand Dollars ($200,000.00) by
transferring readily available U.S. funds by wire transfer to an account
designated by DigiDeal. All of the terms and conditions of the amended
Subscription Agreement shall be applicable to PDS's purchase of the Shares and
shall survive the termination of the Agreements.
b. Cash Payment. As an additional part of the overall termination of
the Agreements, PDS hereby agrees that on or before August 15, 2002, it shall
pay to DigiDeal a sum equal to *** by transferring readily available U.S. funds
by wire transfer to an account designated by DigiDeal.
4. License Agreements; Buyout; Purchase of Intellectual Property.
a. Non-Exclusive License Agreement. As part of the overall termination
of the Agreements, the Parties hereby enter into a Non-Exclusive License
Agreement ("Non-Exclusive License Agreement"). Pursuant to this Non-Exclusive
License Agreement in this subsection 4-a, DigiDeal hereby grants PDS a
non-exclusive license to manufacture, assemble, produce, program, reprogram,
market, promote, lease, use, sell, service, repair, recover (repossess), and
remanufacture up to Seventy-Four (74) Digital Card System ("DCS") products ("DCS
Products") that are currently in the possession of PDS on May 3, 2002 (the
"Maximum DCS Products"). DigiDeal also hereby grants PDS the non-exclusive right
to practice or otherwise use any methods or processes, which are necessary to
distribute and operate the Maximum DCS Products. The geographic scope of this
Non-Exclusive License Agreement shall be limited to the states and Sovereign
Nations of Colorado, Mississippi, Nevada, North Carolina, Florida (including
cruises-to-nowhere), California, and Minnesota (collectively, the "Non-Exclusive
License Jurisdictions"). This Non-Exclusive License Agreement is restricted to
the Maximum DCS Products, is not subject to a minimum distribution requirement
and is for an indefinite term, subject to termination pursuant to Subsection 3-c
hereof. This Non-Exclusive License Agreement shall not be sold, transferred,
pledged, assigned, hypothecated or made subject to a negative pledge by PDS
without the prior written consent of DigiDeal, which shall
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SECURITIES AND EXCHANGE COMMISSION"
not be unreasonably withheld. By executing this Agreement, both Parties
acknowledges that there would be no adequate remedy at law to a non-breaching
Party for money damages if any of the covenants set forth in this Subsection 4-a
were breached and therefore agrees that the non-breaching Party shall be
entitled to specific enforcement of such covenants in addition to any other
remedy to which they may be entitled, at law or in equity.
b. Exclusive License Agreement.
(i) As part of the overall termination of the Agreements, the
Parties also hereby enter into an Exclusive License Agreement ("Exclusive
License Agreement"). Pursuant to this Exclusive License Agreement in this
Subsection 4-b, DigiDeal hereby grants PDS an exclusive license to manufacture,
assemble, produce, program, reprogram, market, promote, lease, use, sell,
service, repair, and recover (repossess) DCS Products. DigiDeal also hereby
grants PDS the exclusive right to practice or otherwise use any methods or
processes, which are necessary to distribute and operate the Maximum DCS
Products. The geographic scope of this Exclusive License Agreement shall be
limited to *** and/or any direct or indirect affiliates of ***. The Exclusive
License Agreement is not subject to a minimum distribution requirement and is
for an indefinite term, subject to termination pursuant to Subsection 3-c
hereof. This Exclusive License Agreement shall not be sold, transferred,
pledged, assigned, hypothecated or made subject to a negative pledge by PDS
without the prior written consent of DigiDeal, which shall not be unreasonably
withheld. The Parties agree that they will cooperate with one another in
presenting a mutually agreeable Lease/License Agreement to *** for PDS's
placement of DCS Products.
(ii) DigiDeal further agrees as part of the Exclusive License
Agreement, that it will not circumvent or attempt to circumvent PDS, with
respect to any previously established contractual or business relationship
(written or verbal) related to *** and/or any direct or indirect affiliates of
*** and the use, operation and/or distribution of DCS Products. Subject to
Subsection 4-b-(iii) below, DigiDeal hereby specifically agrees that neither it
nor any of its affiliates, alone or in connection with one or more third
parties, will solicit, negotiate, enter into or consummate any agreement with
*** and/or any direct or indirect affiliates of *** related to DCS, DCS Products
and/or any other product utilizing in any manner whatsoever, DCS or any
derivative of DCS or any electronic or mechanical table games, without PDS's
prior written consent. By executing this Agreement, both Parties acknowledges
that there would be no adequate remedy at law to a non-breaching Party for money
damages if any of the covenants set forth in this Subsection 4-b-(ii) were
breached and therefore agree that the non-breaching Party shall be entitled to
specific enforcement of such covenants in addition to any other remedy to which
they may be entitled, at law or in equity.
(iii) Subsections 4-b-(i) and (ii) notwithstanding, DigiDeal may
lease, sell or distribute DigiDeal's own DCS Products to ***, without PDS's
prior written consent under the following conditions:
(1) DigiDeal notifies PDS in writing of the nature of such
transaction within ten (10) days of such lease or sale; and
(2) DigiDeal purchases the tables, hardware and parts for
distribution to *** from PDS pursuant to the terms and conditions of the Vendor
Agreement, which is more particularly described in Section 5 of this Agreement;
and
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(3) All revenue received by DigiDeal under this Subsection
4-b-(iii) shall be treated in the same manner as set forth in Section 28 of the
Domestic Agreement and the Tribal Agreement, except that such obligations of PDS
to share revenues with DigiDeal shall become an obligation of DigiDeal to share
revenue with PDS under the same terms and conditions. DigiDeal shall have no
right to any revenue if it fails to provide general customer support,
maintenance or repair services for any DCS Products distributed to ***.
c. Buyout.
(i) The Non-Exclusive License Agreement may be terminated by
DigiDeal, at anytime, upon DigiDeal paying to PDS consideration equal to (i) the
actual and direct costs of production of the existing inventory of the DCS
Products parts and supplies and the DCS tables located in the Non-Exclusive
License Jurisdictions after deducting those amounts recouped by PDS for its
costs of the units pursuant to Section 27 and 28 of the Domestic Agreement and
Tribal Agreement (which Sections 27 and 28 are incorporated by reference herein
as if fully set forth), plus (ii) an amount equal to five (5) times annualized
PDS's share of the revenues generated from the DCS tables out under lease as
calculated pursuant to Section 27 and 28 of the Domestic Agreement and the
Tribal Agreement (the "Non-Exclusive Lease Revenues") (the "Non-Exclusive
Buyout").
(ii) The Exclusive License Agreement may be terminated by
DigiDeal, at anytime, upon DigiDeal paying to PDS consideration equal to (i) the
actual and direct costs of production of the existing inventory of the DCS
Products parts and supplies and the DCS tables located in *** after deducting
those amounts recouped by PDS for its costs of the units pursuant to Section 27
and 28 of the Domestic Agreement and Tribal Agreement (which Sections 27 and 28
are incorporated by reference herein as if fully set forth), plus (ii) an amount
equal to five (5) times annualized PDS's share of the revenues generated from
the DCS tables out under lease as calculated pursuant to Section 27 and 28 of
the Domestic Agreement and the Tribal Agreement for the first thirty-six (36)
DCS tables under lease with ***, plus (iii) an amount equal to two and one-half
(2.5) times annualized PDS's share of the revenues generated from the DCS tables
out under lease as calculated pursuant to Section 27 and 28 of the Domestic
Agreement and the Tribal Agreement for any DCS tables under lease with *** in
excess of thirty-six (36), if any (the "Exclusive Lease Revenues") (the
"Exclusive Buyout"). The preceding sentence notwithstanding, the Exclusive
Buyout of the Exclusive License Agreement shall in no event be less than ***
(based on fifty percent (50%) of thirty-six (36) DCS tables @ a monthly lease
rate of ***, regardless of the actual number of DCS tables in operation at ***.
(iii) Within five (5) days of a written request by DigiDeal, PDS
shall provide DigiDeal with a written accounting of the Non-Exclusive Lease
Revenues and/or the Exclusive Lease Revenues (collectively the "Lease Revenues")
as required by Sections 30 and 31 of the Domestic Agreement and the Tribal
Agreement (which Sections 30 and 31 are incorporated by reference herein as if
fully set forth). Upon DigiDeal or the Third-Party's (defined below) exercise of
the Non-Exclusive Buyout and/or the Exclusive Buyout (collectively the "Buyout")
and payment to PDS or its permitted assignees of all sums due under this
subsection 3-c, PDS shall at its sole expense transfer, assign and deliver all
of its right, title and interest in and to (i) its existing inventory of DCS
parts and supplies, and (ii) the DCS tables located in the Non-Exclusive License
Jurisdictions and/or ***. PDS shall also grant a thirty (30) day license to
Digideal or its assignee to use the PDS Software (as defined in Subsection 3-d)
for the DCS tables, subject to applicable gaming laws. All PDS Software (as
defined in subsection 3-d below) shall remain the exclusive property of PDS,
subject to Subsection 3-e.
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SECURITIES AND EXCHANGE COMMISSION"
DigiDeal's right to exercise the Buyout may be assigned to a Third-Party (see
Section 7-a below) subject to applicable gaming laws.
d. Purchase of Intellectual Property. PDS hereby irrevocably sells to
DigiDeal, and DigiDeal hereby purchases from PDS, all of PDS's Intellectual
Property related to DCS free and clear of all liens, encumbrances and charges
(collectively, "Liens") for the total sum of One Thousand Dollars ($1,000.00) in
hand delivered. PDS hereby irrevocably assigns the Intellectual Property rights
being purchased by DigiDeal, free and clear of all Liens. For the purposes of
this subsection and subsection 3-d, the term "Intellectual Property" shall mean
the "Transferred Assets" as that term is defined in Section 3.17 of the Domestic
Agreement, and "The Patents", "The Patent Rights", the "Designated Technology",
the "Designated Technology Rights", "The Copyright Works", "The Copyrights", the
"Designated Trademarks", and the "Designated Trademark Rights", as those terms
are defined in Sections 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, and 3.14
respectively of the Tribal Agreement, and the "Software", as that term is
defined in Section 2(a) of the Software License Agreement and Software Transfer
Agreement, and that U.S. Provisional Patent Application Serial No. 60/347,364
entitled "Flat Felted Gaming Table And Method of Manufacture" filed January 10,
2002 by Wilfred Apostal and assigned to PDS, and shall also include all
trademarks, patents, know-how, developments, designs, trade secrets, processes
and other confidential information, intellectual and similar intangible property
rights, whether or not patentable or copyrightable (or otherwise subject to
legally enforceable restrictions or protections against unauthorized third party
usage), and any and all applications for, registrations of and extensions,
divisions, renewals and reissuances of, and all improvements and developments of
any of the foregoing, but specifically excludes the software developed by PDS
for use or play in Nevada and other jurisdictions as specified in Exhibit "2."
(the "PDS Software"). PDS retains no rights to the Intellectual Property, or any
other Intellectual Property related to or associated with the DCS, other than
the PDS Software. PDS shall not sell, transfer, pledge, assign or hypothecate
the PDS Software, or make the PDS Software subject to a negative pledge, without
the prior written consent of Digideal.
e. Option to Purchase the PDS Software. PDS hereby grants Digideal the
option to purchase the PDS Software for a sum of not more than *** or such
lesser amount as agreed upon by the parties (the "Option Price"). This option to
purchase shall be exercised by notifying PDS in writing that DigiDeal or its
assignee has elected to exercise this option. DigiDeal or its assignee shall
tender payment of the Option Price along with the notification that it is
exercising this option. PDS shall then execute an assignment of all Intellectual
Property rights covering the PDS Software. DigiDeal may assign this option to a
third party in its sole and absolute discretion and shall provide PDS with a
copy of any such assignment.
5. Vendor Agreement.
a. Vendor Agreement. As part of the overall termination of the
Agreements, the Parties also hereby enter into a Vendor Agreement ("Vendor
Agreement"). Pursuant to this Vendor Agreement in this Section 5, DigiDeal
agrees that PDS, subject to availability, shall be DigiDeal's exclusive vendor
for tables, hardware and parts ("DCS Inventory") for all (i) DCS Products,
and/or (ii) any other product utilizing in any manner whatsoever the DCS or any
derivative of DCS, that DigiDeal sells, leases, or otherwise distributes to any
of its customers worldwide. Subject to availability, DigiDeal agrees to purchase
first from PDS fifty (50) completed flat-top DCS tables (in any increment) which
are part of the DCS Inventory, provided however, that if PDS no longer has
available in its DCS Inventory the requested tables, hardware and/or parts,
DigiDeal shall be free to purchase from another
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vendor, in its sole discretion, but in no event prior to the total depletion of
the DCS Inventory. Each table shall be in a completed, functional condition, but
shall be neutral as to any particular DCS theme.
b. Pricing. The Parties agree that the purchase price for each DCS
table in the DCS Inventory shall be *** (not including shipping, handling or
applicable sales tax). Parts and other miscellaneous hardware shall be sold for
prices to be mutually agreed to by and between the Parties. All other terms and
conditions of any sales to DigiDeal consummated under this Vendor Agreement
(i.e. financing, interest rate, etc.) shall be mutually agreed upon by and
between the Parties on a case-by-case basis, but in no event shall the purchase
price for any part of the DCS Inventory be less than PDS's booked costs
associated therewith.
c. Financing. The Parties also agree that DigiDeal, where appropriate
in the sole opinion of DigiDeal, shall recommend PDS financing services, if
needed to its customers who desire financing for the acquisition of DCS
Products. In turn, PDS agrees that, where appropriate, in the sole discretion of
PDS, it will offer financing to DigiDeal's customers under a lease or financing
structure, the terms of which shall be mutually agreed to by both PDS and the
DigiDeal customer seeking financing. All financing transactions are subject to
the approval of PDS's Credit Committee, in its sole discretion.
6. Termination of Agreements.
a. Section 62 of the Domestic Agreement and the Tribal Agreement are
hereby incorporated by reference herein as if fully set forth and amended as
follows: Upon termination as provided in this Termination Agreement, all rights
and obligations of DigiDeal and PDS under the Agreements, except for those
specifically set forth in this Termination Agreement, shall terminate.
Termination shall not diminish PDS's obligation to make payments as required in
this Termination Agreement. PDS shall continue to treat revenue in the same
manner after termination as prior to termination as set forth in Section 28 of
the Domestic Agreement and the Tribal Agreement, except that PDS shall have no
right to any revenue if PDS fails to provide general customer support,
maintenance or repair services.
b. Consulting Agreement. As part of the overall termination of the
Agreements, the Parties agree that upon execution of this Termination Agreement
and upon PDS completing its purchase of the Shares pursuant to Section 3 hereof,
the Parties will simultaneously execute a Mutual Release and Termination of the
Consulting Agreement, which shall be in a form and substance mutually agreeable
to both Parties.
c. Domestic Agreement, Tribal Agreement, Software Transfer Agreement
and Software License Agreement. As part of the overall termination of the
Agreements, the Parties shall simultaneously execute a Mutual Release and
Termination of the Domestic Agreement, Tribal Agreement, Software Transfer
Agreement and Software License Agreement, all of which shall be in a form and
substance mutually agreeable to both Parties. All sections of the Domestic
Agreement and the Tribal Agreement incorporated by reference herein shall
survive the termination of the Agreements and remain in full force and effect as
provided herein.
7. Additional Assurances of PDS.
a. Up to and until the date of the Buyout, PDS shall use its best
efforts to assist DigiDeal in facilitating a transition of the DCS Products and
DCS technology and Intellectual Property to a third party (the "Third-Party"),
including assisting in identifying the Third Party and assisting in structuring
terms acceptable to DigiDeal.
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b. Up to and until the date of the Buyout, PDS shall apply any
revenues due and owing to DigiDeal under the License Agreement against
receivables due to PDS from DigiDeal.
c. PDS shall timely provide all required notices and filings relating
to this Termination Agreement to the Nevada State Gaming Control Board and any
other applicable gaming regulatory authority. PDS shall provide DigiDeal and its
counsel with a copy of all such notices and filings at least two (2) days prior
to filing them, and DigiDeal shall have one (1) day to suggest any revisions.
PDS shall not issue any press release or other public notice relating to this
Termination Agreement or the DCS Products without DigiDeal's consent, which
consent shall not be unreasonably withheld.
d. PDS agrees that it shall not sell the PDS Software to any person or
entity other than DigiDeal or the Third-Party.
e. PDS represents that it has not violated the Mortgages of Patent
Rights, which was attached to, and made a part of, the Domestic Agreement and/or
the Tribal Agreement as Section 82, Appendix B.
8. Non-Compete.
a. In order to induce DigiDeal to enter into this Termination
Agreement and to consummate the transactions contemplated by this Termination
Agreement, and as additional consideration for the Consideration of Buyer, for a
period commencing on the Effective Date and ending on the fifth anniversary of
the Effective Date (the "Non-Compete Period"), PDS agrees that it will not,
except as permitted herein in Section 4, directly engage or participate in any
business or activity involving the manufacture, sale, distribution or operation
of the DCS; provided that nothing in this Section shall prevent PDS from (i)
engaging or participating in such business or activity at the request of and on
behalf of DigiDeal, (ii) owning beneficially, as an investment, up to forty-nine
percent (49%) of any company that competes with DigiDeal, or (iii) engaging in
financing activities on behalf of third parties whether related to the DCS or
not.
b. PDS represents to DigiDeal that the enforcement of the
non-competition covenants set forth in this Section (collectively, the
"Covenants") contained in this Section would not be unduly burdensome to it. PDS
agrees that a breach or violation of the this Section shall entitle DigiDeal, as
a matter of right, to an injunction issued by any court of competent
jurisdiction, restraining any further or continued breach or violation of this
Section. Such right to an injunction shall be cumulative and in addition to, and
not in lieu of, any other remedies to which DigiDeal may show itself justly
entitled. Further, during any period in which PDS is in breach of this Section,
the time period of this Section shall be extended for an amount of time that PDS
is in breach hereof, with the effect that the total duration of this Section
shall be the original period plus the actual amount of time that PDS is in
breach.
c. The representations and Covenants contained in this Section on the
part of PDS will be construed as ancillary to and independent of any other
provisions of this Termination Agreement, and the existence of any claim or
cause of action of PDS against DigiDeal or any officer, director, or stockholder
of DigiDeal, whether predicated on this Termination Agreement or otherwise,
shall not constitute a defense to the enforcement by DigiDeal of this Section.
d. Further, PDS agrees that the Covenants set forth herein are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by DigiDeal. PDS acknowledges and agrees that (i)
DigiDeal would not enter into this Termination Agreement unless
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Seller agreed to the Covenants; (ii) it has read and understands the terms of
this Termination Agreement including, without limitation, the Covenants and has
been provided the opportunity to discuss this Termination Agreement and the
Covenants with DigiDeal and counsel of its choice and has carefully considered
the nature and extent of the restrictions upon it and the rights and remedies
conferred upon DigiDeal hereunder; and (iii) it will receive consideration for
agreeing to the Covenants. PDS hereby acknowledges and agrees that DigiDeal has
a legitimate interest in protecting its business and that the Covenants are
reasonable in limitations as to time, scope, geographical area and activity, and
are fully required and are no greater than necessary to protect the legitimate
business interests of DigiDeal. PDS further agrees that the Covenants are not
unduly harsh or oppressive to PDS in curtailing its legitimate efforts to earn a
livelihood and do not stifle the inherent skill and experience of PDS, or confer
a benefit upon DigiDeal disproportionate to the detriment to DigiDeal, or harm
in any manner whatsoever the public interest or operate as a bar to the PDS's
sole means of support.
PDS agrees that if the Covenants should be held by any court or other
constituted legal authority to be void or unenforceable in any particular area
or jurisdiction, then PDS and DigiDeal shall consider this Termination Agreement
to be modified so as to eliminate that particular area or jurisdiction or scope
as to which the Covenants are held to be void or otherwise unenforceable, and as
to all other areas and jurisdictions covered by this Termination Agreement, the
terms hereof shall remain in full force and effect as originally written.
Further, if the Covenants should be held by any court or other constituted legal
authority to be effective in any particular area or jurisdiction or scope only
if said Covenants are modified to limit their duration or scope, then PDS and
DigiDeal shall consider such Covenants to be amended and modified with respect
to that particular area or jurisdiction so as to comply with the order of any
court or other constituted legal authority, and as to all other political
subdivisions of the United States, the Covenants shall remain in full force and
effect as originally written.
9. Miscellaneous Provisions.
a. Binding Effect. This Settlement Agreement shall be binding upon and
inure to the benefit of the Parties and their respective, permitted successors,
heirs, executors, administrators, assigns, and all persons claiming by, through
or under them.
b. Execution. The Parties hereto agree that execution of a facsimile
of this Termination Agreement shall have the same force and effect as an
executed original and shall be binding upon the Parties. The Parties also agree
that facsimile signatures shall be sufficient unless a third-party requires
originals.
c. Governing Law. The substantive and procedural laws of the State of
Nevada shall govern the validity, construction, interpretation, performance and
enforcement of this Settlement Agreement and the Parties agree to jurisdiction
in Nevada without reference to its conflict of laws provisions.
d. Arbitration. The arbitration provisions of Section 78 of the
Domestic Agreement and the Tribal Agreement are incorporated by reference herein
as if fully set forth.
e. Due Authorization. The Parties represent and warrant to each other
that all necessary corporate action required to execute and perform this
Termination Agreement has been taken, that the person signing this Termination
Agreement on behalf of each Party is duly authorized and that this Termination
Agreement is binding on each Party.
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f. Confidentiality and Disclosure. The Parties shall keep the terms
and conditions of this Termination Agreement in the strictest confidence. Both
Parties agree not to divulge the terms and conditions of this Termination
Agreement to any other person, without the prior written consent of other,
gaming regulatory authorities excluded. Notwithstanding the above, DigiDeal may
provide the information and this Termination Agreement to the Third-Party or a
prospective Third-Party without the prior consent of PDS.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date set forth above.
"PDS" "DigiDeal"
PDS GAMING CORPORATION DIGIDEAL CORPORATION
By: /s/ Johan P. Finley By: /s/ Michael J. Kuhn
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Johan P. Finley Michael J. Kuhn
Chief Executive Officer President
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Exhibit "1."
Amended Subscription Agreement
AMENDED AND RESTATED
DIGIDEAL CORPORATION
SUBSCRIPTION AGREEMENT FOR PURCHASE OF SHARES
DigiDeal Corporation
5207 East Third Avenue
Spokane, WA 99212
Gentlemen/Madam:
1. Amendment and Restatement. This Amended and Restated Subscription Agreement
amends, restates and replaces in its entirety that Subscription Agreement by and
between the Company and PDS dated November 21, 2001.
2. Definitions. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms as follows:
2.1. "Company" shall mean DigiDeal Corporation, a closely held Nevada
corporation.
2.2. "PDS" shall mean PDS Gaming Corporation, a publicly traded Minnesota
corporation.
2.3. "Share" or "Shares" shall mean shares of common stock of the Company.
2.4. "Subscription Agreement" or "Agreement" shall mean this Amended and
Restated Subscription Agreement for Purchase of Shares and includes all oral
agreements between the parties hereto relating to the subject matter of this
Agreement.
3. Subscription. PDS hereby irrevocable agrees to purchase Shares of the Company
in the total amount described in section 4 below, subject to the terms and
conditions set forth herein.
4. Number of Shares. Upon execution of this Agreement, PDS will purchase 108,108
Shares of the Company at $1.85 per /share for a total cost of $200,000.00.
5. Representations and Warranties. PDS represents and warrants to the Company as
follows:
5.1. The Shares are being purchased by PDS for its own account, and not
with a view to distribute or resell the same in any manner. PDS does not have
any present intention of disposing of any or all of the Shares at any particular
future in time or upon the occurrence of any particular event.
5.2. PDS confirms that, in making the decision to purchase the Shares, it
has relied solely upon its own independent investigation of the Company and/or
the investigation made by its corporate tax or other advisors. PDS fully
understands the Offering Memorandum, which has been presented to PDS by the
Company. PDS's advisors have had an opportunity to ask questions of, and receive
answers
Page 1 of 3
from, persons acting on behalf of the Company. PDS has relied solely upon the
information provided in writing on behalf of the Company, or information from
books and records furnished on behalf of the Company. PDS understands that all
documents, books, and records of the Company will be available for inspection by
PDS at any time prior to the closing of the purchase evidenced hereby. No oral
representations have been made and no information has been furnished to PDS or
any officer of PDS in connection with the offer of the Shares, which have been
in any way inconsistent with the foregoing specified information.
5.3. PDS is aware that the Shares are subject to substantial risks. PDS is
capable of bearing the economic risk of its purchase of the Shares. PDS has
adequate net worth and means of providing for its current needs and corporate
contingencies to sustain a complete loss of its interest in the Company and has
no need for liquidity of its Shares. In addition, PDS's present financial
condition is such that it is under no present need, nor does it contemplate any
future need to dispose of any portion of the Shares to satisfy any existing or
contemplated undertaking, need, or indebtedness.
5.4. PDS has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the purchase of
the Shares.
5.5. PDS understands that no federal or state agency has passed on or made
any recommendation pertaining to the Shares. The information set forth in PDS's
Investor Questionnaire (the "Questionnaire") is true and correct. PDS
understands that the Company is relying upon the truth and accuracy of the
information contained in the Questionnaire and the representations and
warranties contained this Subscription Agreement in the offering of the Shares
for sale without registration under the securities laws.
6. Restrictions on Transferability of Shares. PDS understands that the Shares
may be considered to be securities and the Shares are not, and will not be,
registered under the securities laws, in reliance upon exemptions from
registration for nonpublic offerings. Therefore, Shares may only be sold,
pledged, hypothecated, or otherwise transferred (with or without consideration)
upon the conditions specified in this paragraph, or as otherwise agreed to by
the Company. No assignment of any Shares shall be effective if the assignment
would violate the provisions of the securities laws. If the Company so requires,
no assignment shall be effective unless PDS, as transferor, deliver an opinion
of counsel to the Company, which opinion must be satisfactory to the Company in
all respects, to the effect that such transfer will not violate the securities
laws.
7. Notices. Any notices or other communications required or permitted hereby
shall be sufficient if sent by registered or certified mail, postage prepaid,
return receipt requested, and, if to the Company, at the address to which this
letter is addressed at the head of this Subscription Agreement, and if to the
undersigned, at the address set forth at my signature hereto, or such other
address as either the Company or I shall designate to the other by notice in
writing.
8. Successors and Assigns. This Subscription Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and to the successors and
assigns of the Company and to the successors, and permitted assignees of the
undersigned.
9. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of Washington, and, to the
extent it involves any United States statue, in accordance with the laws of the
United States.
Page 2 of 3
10. Attorney's Fees and Costs. In any action at law or equity to enforce or
interpret any of the provisions or rights under this Subscription Agreement, the
prevailing party shall be entitled to costs, expenses, and reasonable attorney's
fees incurred therein, including without limitation, such costs, expenses, and
fees on any appeal.
11. Execution. The Parties hereto agree that execution of a facsimile of this
Subscription Agreement shall have the same force and effect as an executed
original and shall be binding upon the parties. The parties also agree that
facsimile signatures shall be sufficient unless a third-party requires
originals.
IN WITNESS WHEREOF, the undersigned agrees to all the terms of this Amended
Subscription Agreement, and has executed this Agreement this 3rd day of May
2002.
PDS GAMING CORPORATION
By: /s/ Johan P. Finley
-----------------------------
Johan P. Finley, CEO
Federal Tax Id Number: 41-1605970
6171 McLeod Drive
Las Vegas, NV 89120-4048
- -------------------------------------------------
Total # of Shares Purchased: 108,108 / Total Purchase Price $200,000.00
Accepted this 3rd day of May 2001.
DIGIDEAL CORPORATION
By: /s/ Michael J. Kuhn
---------------------------
Title: President
------------------------
Page 3 of 3
Upon acceptance of this Subscription Agreement by the Company, the Company will
be bound by the following terms and conditions:
1. General.
1.1 Upon the terms and conditions stated herein, the Company agrees that
persons purchasing Shares in this offering ("1999 Shareholders") shall be
entitled for a period of three (3) years, from the date the Subscription
Agreement of a 1999 Shareholder is accepted, to receive additional shares of
common stock if the Company should issue any shares of its voting or nonvoting
common ("New Issuance") stock at a price less than offering price of $1.35 per
share ("Offering Price"). Also, this right will terminate in the event the
Company signs a letter of intent with an underwriter for the public offering of
any of the Company's common stock and such letter of intent provides that,
following the public offering, the common stock shall be traded on a national
securities exchange or market.
1.2 The number of shares to be issued shall be determined as follows:
First, the number of "fully paid" shares is determined by dividing (a)
the product of the number of shares sold for less that than the
Offering Price times the per share consideration actually received by
the Company for shares; by (b) the Offering Price. This amount is then
subtracted from the total number of shares sold for less that than the
Offering Price to determine the number of shares of "cheap stock". For
instance, assume that the Company sold 135,000 shares for $1.00 per
share. The number of fully paid shares would be determined by dividing
$135,000.00 by $1.35 or $100,000. Therefore, the total number of
shares of cheap stock issued would be 35,000.
1.3 The number of shares to be issued to a 1999 Shareholder is determined
as follows:
The product of (a) the sum of the total outstanding stock of the
Company prior to New Issuance and the total number of cheap shares;
divided by (b) the difference between 100% and the percentage of stock
owned by a 1999 Shareholder prior to the issuance of the shares.
The following amounts are then subtracted from the product determined
above: The total number of shares outstanding prior to the New
Issuance, total amount of cheap stock and the total number of shares
owned by a 1999 Shareholder prior to the New Issuance.
For Example, assume that prior to the issuance of the 135,000 shares
at $1.00 a share, the Company had 1,000,000 shares outstanding and a
1999 Shareholder owned 50,000 or 5% of the Company. The total number
of new shares issued to the Shareholder would be 4,473. This amount
was determined as follows:
Product of (a) total number of outstanding shares (1,000,000)
plus the total number of cheap stock (35,000) divided by (b) 95%
(100% minus 5%). This amount equals 1,089,473.
The following amounts are then subtracted from 1,089,473: total
number of outstanding shares (1,000,000), total amount of cheap
stock (35,000) and the total number of shares owned by 1999
Shareholder (50,000). The amount remaining is the number of
shares to be issued to 1999 Shareholder- 4,473.
2. Adjustments.
2.1 In the event the Company shall, at any time or from time to time (a)
subdivide the outstanding shares of voting or nonvoting common stock, or declare
or pay a dividend on the voting common stock payable in shares of voting or
nonvoting common stock or securities convertible into or exchangeable for shares
of voting common stock; or (b) combine the outstanding shares of voting or
nonvoting common stock, or securities convertible or exchangeable into shares of
voting or nonvoting common stock into a smaller number of shares, in each case
whether by reclassification of shares, recapitalization of the Company
(including a recapitalization effected by a merger or consolidation) or
otherwise, the Offering Price in effect immediately prior to such action shall
be adjusted by multiplying such Offering Price by a fraction, the numerator of
which is the number of shares of voting common stock outstanding immediately
before such event and the denominator of which is the number of shares of voting
common stock outstanding immediately after such event.
2.2 The following provisions will be applicable:
(1) In the case of an issue or sale for cash of shares, the
"consideration actually received" by the Company therefore shall be deemed to be
the amount of cash received, before deducting therefrom any commissions or
expenses paid by the Company.
(2) In the case of the issuance of additional shares of voting
common stock for a consideration other than cash or a consideration partly other
than cash, the amount of the "consideration actually received" by the Company
for such shares shall be deemed to be fair market value of such consideration as
determined in good faith by the Board of Directors.
3. De Minimis Adjustments.
Notwithstanding any other provisions of this Section, the Company shall not be
required to make any adjustment of the Offering Price unless such adjustment
would require an increase or decrease of at least 1% in the Offering Price. Any
lesser adjustment shall be carried forward and shall be made no later than the
time of, and together with, the next subsequent adjustment, which, together with
any adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least 1% in the Offering Price.
4. Excluded Shares.
4.1 Anything herein to the contrary notwithstanding, 1999 Shareholders will
not be issued any additional shares nor shall there be any adjustment of the
Offering Price in the case of:
(1) Securities issued pursuant to the acquisition of all or part
of another company by the Company by merger or other reorganization, or by the
purchase of or part of the assets of another company, pursuant to a plan,
arrangement or agreement approved by the Board of Directors;
(2) Securities issued pursuant to existing options or warrants or
securities issued or issuable to officers, directors, employees or consultants
of the Company pursuant to stock grant, stock
purchase and/or stock option plans or any other stock incentive program,
arrangement or agreement approved by the Board of Directors;
(3) Shares of voting or nonvoting common stock received by the
Company following repurchase of such shares pursuant to any restricted stock
purchase agreement.
5. Fractional Shares.
The Company shall not be obligated to deliver to 1999 Shareholders any
fractional share or shares of common stock, but in lieu thereof may make a cash
payment in respect thereof in any manner permitted by law.
6. Reservation of Shares.
The Company shall at all times reserve the keep available out if its authorized
and uninsured voting common stock as shall from time to time be needed to
fulfill Company's obligations hereunder.
Exhibit "2."
PDS Software/Copyrights
Copyright Registrations
- -----------------------
Application to register copyright on
Digital 21 Software, Version 1302 Filed 9/27/01 by PDS Pending
Application to register copyright on
Bonanza Blackjack Software,
Version 0102 Filed 9/27/01 by PDS Pending
Digital 21 Software
Version 1303 Derivative of v.1302
Digital 21 Software
Version 1401 Derivative of v.1302
Digital 21 Software
Version 1402 Derivative of v.1302
Bonanza Blackjack Software
Version 0103 Derivative of v.0102
Bonanza Blackjack Software
Version 0201 Derivative of v.0102