Exhibit 10.44

 

SETTLEMENT AGREEMENT AND RELEASE

 

THIS SETTLEMENT AGREEMENT AND RELEASE (the “Settlement Agreement”) by and
between GE CAPITAL CORPORATION, a Delaware corporation (“GE Capital”), HELLER
EMX, INC., a Delaware corporation (“EMX”), and HELLER FINANCIAL LEASING, INC., a
Delaware corporation (“HFL”) (collectively, “GE”), and PDS GAMING CORPORATION, a
Minnesota corporation, and PDS GAMING CORPORATION-NEVADA, a Nevada corporation
(collectively, “PDS”), is dated and effective this February 27, 2004.

 

WHEREAS, on October 15, 2003, GE brought a lawsuit against PDS in the United
States District Court for the Southern District of New York, case number 03 CV
6187, arising from and relating to the parties’ relationship under the following
agreements:

 

(i)            the Sale and Purchase Agreement, dated as of April 20, 2001, as
amended by Amendment Agreement, dated as of June 2001, between PDS and HFL,
relating to Lease Schedule No. 1, dated March 29, 2001, to a Master Lease
Agreement, dated March 29, 2001, between PDS and Trump Taj Mahal Associates;

 

(ii)           the Sale and Purchase Agreement, dated as of June 8, 2001,
between PDS and HFL, relating to Lease Schedule No. 2, dated May 17, 2001, to a
Master Lease Agreement, dated March 29, 2001, between PDS and Trump Taj Mahal
Associates;

 

(iii)          the Sale and Purchase Agreement, dated as of June 29, 2001,
between PDS and EMX, relating to Lease Schedule No. 1, dated June 27, 2001, to a
Master Lease Agreement, dated June 27, 2001, between PDS and Trump Plaza
Associates;

 

(iv)          the Sale and Purchase Agreement, dated as of July 2, 2001, between
PDS and EMX, relating to Lease Schedule No. 1, dated June 25, 2001, to a Master
Lease Agreement, dated June 25, 2001, between PDS and Trump’s Castle Associates
(the agreements just listed in subparagraphs (i)-(iv) collectively are referred
to as the “Trump Sale and Purchase Agreements”);

 

(v)           the Nonrecourse Proceeds Sharing Agreement, dated as of
December 31, 2001, between PDS and EMX (the “Sharing Agreement”), and the
related Subordinate Pledge and Security Agreement, dated as of December 31,
2001, between PDS and EMX (the “Pledge Agreement”); and

 

1

--------------------------------------------------------------------------------

 

(vi)          the Warrant Agreement, dated as of March 12, 2002, between PDS and
GE Capital (the “Warrant”)

 

(which lawsuit and all claims and counterclaims that were or could have been
raised in the lawsuit will hereinafter be referred to as the “GE Lawsuit”); and

 

WHEREAS, on October 3, 2003, PDS brought a lawsuit against EMX in the United
States District Court for the District of Nevada, case number
CV-S-03-1253-JCM-LRL, which was transferred to the United States District Court
for the Southern District of New York and assigned case number 03 CV 09381,
arising from and relating to the parties’ relationship under the Sharing
Agreement and the Pledge Agreement (which lawsuit and all claims and
counterclaims that were or could have been raised in the lawsuit will
hereinafter be referred to as the “PDS Lawsuit”); and

 

WHEREAS, the parties in good faith wish to resolve the dispute between them
relating to the subject matter of the GE Lawsuit and the PDS Lawsuit;

 

THEREFORE, in consideration of the mutual exchange of promises which follows and
other valuable consideration, the parties agree as follows:

 

1.             PDS Repurchase of Trump, Jim’s Enterprises and State Line Lease
Schedules.  PDS agrees that, on the Closing Date, PDS shall pay $10,518,041.14
to EMX (the “Repurchase Payment”), to repurchase the Trump, Jim’s Enterprises
and State Line Lease Schedules as provided in the Sale and Purchase Agreement
attached hereto as Exhibit A.

 

On the Closing Date, the Repurchase Payment shall be made in two parts.  First,
PDS agrees that the amount of $4,946,725.05 that is currently held in escrow
account 03090161 at Stewart Title of Nevada, in Las Vegas, Nevada, relating to
the Pioneer Hotel early buy-out transaction, plus $6,597.83 which represents all
interest accrued therein (the “Pioneer Escrow Funds”), will be released to GE.

 

2

--------------------------------------------------------------------------------

 

Second, PDS shall pay the remainder of the Repurchase Payment by making a direct
wire transfer of $5,564,718.26 to the following account:

 

Bank of America

231 South LaSalle Street

Chicago, Illinois  60697

ABA # 071000039

Acct. # 81-8-841-1298

Acct Name:  Heller EMX, Inc.

 

The “Closing Date” shall be March 1, 2004.

 

2.             Termination of the Sharing Agreement and the Pledge Agreement. 
PDS agrees that, on the Closing Date, PDS shall pay $2,600,000.00 to EMX by wire
transfer to the EMX account identified in Paragraph 1 above (the “Sharing
Agreement Payment”).  Upon receipt of the Sharing Agreement Payment by EMX, PDS
and EMX agree that all rights and obligations arising under the Sharing
Agreement and the Pledge Agreement are terminated.

 

In addition, PDS agrees that, after PDS has received $2,600,000.00 in Residual
Profits derived from the User Leases listed on Exhibit B attached hereto (the
“User Leases”), the Residual Profits PDS receives from the User Leases described
as “Non-New Jersey Leases” on Exhibit B shall be distributed, as realized from
each Non-New Jersey Lease (on a lease by lease basis) as follows:  PDS will
receive 75% of the Residual Profits, and EMX will receive 25% of the Residual
Profits up to an aggregate maximum of $400,000.00.  PDS shall use its best
efforts to derive Residual Profits from the User Leases.  PDS shall remarket the
equipment subject to the User Leases in a manner consistent with its remarketing
of any other equipment that is not the subject of this Settlement Agreement. 
Once PDS has distributed to EMX $400,000.00 in Residual Profits realized from
the Non-New Jersey Leases, or in the event that PDS has exhausted its
remarketing efforts and no additional Residual Profits are available under the
User Leases, PDS’s obligation to share any Residual Profits from the User Leases
shall terminate.  All non-defined capitalized terms in this Paragraph 2 shall
have the definitions ascribed to them in

 

3

--------------------------------------------------------------------------------

 

the Sharing Agreement.  For avoidance of doubt, the parties agree that, as
provided in the Sharing Agreement, the Residual Profits shall be calculated as
the total residual proceeds derived from each User Lease less reasonable PDS
direct out-of-pocket remarketing costs and less the PDS Assumed Residual as
indicated on the Sharing Agreement Schedules.  PDS may not deduct any
remarketing fees as direct out-of-pocket remarketing costs.

 

PDS shall provide EMX on a quarterly basis with a report that details (1) the
current status of each User Lease; and (2) any Residual Profits PDS has realized
from each User Lease.  Such reports shall include copies of any documents
evidencing Residual Profit payments received by PDS.  The reports shall be sent
to GE Commercial & Industrial Finance, Inc., 120 Long Ridge Road, Stamford,
Connecticut, 06927, Attention:  Ralph Willis.  Once PDS has distributed to EMX
$400,000.00 in Residual Profits realized from the Non-New Jersey Leases, or upon
notice by PDS that PDS’s remarketing efforts have been exhausted and no
additional Residual Profits are available, PDS’s obligation under this
Settlement Agreement to provide quarterly reports to EMX shall terminate

 

3.             Termination of the Warrant.  PDS and GE Capital agree that, on
the Closing Date, upon receipt of the Repurchase Payment and the Sharing
Agreement Payment as provided in Paragraphs 1-2 above, all rights and
obligations arising under the Warrant are terminated.

 

4.             Amendment of Loan and Security Agreements between Heller
Financial Inc. and PDS.  PDS and GE Capital agree that, on the Closing Date,
upon receipt of the Repurchase Payment and the Sharing Agreement Payment as
provided in Paragraphs 1-2 above, the existing loan documents between PDS and
Heller Financial, Inc. are amended as provided in the amendment agreements
attached hereto as Exhibits C and D.

 

4

--------------------------------------------------------------------------------

 

5.             No Admission Of Liability.  No party to this Settlement
Agreement, by entering into the Settlement Agreement, makes any admission with
regard to the merits of the parties’ dispute or the allegations in the GE
Lawsuit or the PDS Lawsuit.

 

6.             Resolution of the GE Lawsuit and the PDS Lawsuit.  Within five
business days after making the Repurchase Payment and the Sharing Agreement
Payment as provided in Paragraphs 1-2 above, PDS shall provide GE with executed
versions of the Joint Stipulations of Dismissal with Prejudice attached hereto
as Exhibit E.  PDS shall deliver the documents to John Cambria, Salans,
Rockefeller Center, 620 Fifth Avenue, New York, NY, 10020-2457.  Upon such
delivery of these executed documents, PDS hereby authorizes GE to file and
present said executed documents with the United States District Court for the
Southern District of New York.  Thereafter, the parties shall take no other
action to prosecute the GE Lawsuit or the PDS Lawsuit.

 

7.             Cooperation Regarding the New Jersey Casino Control Commission. 
PDS and GE agree to cooperate regarding advising the New Jersey Casino Control
Commission (the “Commission”) of this Settlement Agreement, and preparing any
filings or attending any proceedings which the Commission may require with
respect to this Settlement Agreement.  Each party will bear its own fees and
costs with respect to any such filings or proceedings.

 

8.             Release By GE.  On the Closing Date, upon receipt of the total
sum of $13,111,443.31, plus any accrued interest in escrow account 03090161,
representing the Repurchase Payment plus the Sharing Agreement Payment as
provided in Paragraphs 1-2 above,  GE, for itself and its affiliates,
subsidiaries, parents, predecessors, successors in interest, officers,
directors, employees, agents and representatives, agrees that it releases and
forever discharges PDS, its affiliates, subsidiaries, parents, predecessors,
successors in interest, officers, directors, employees, agents and
representatives, from any and all claims, and causes of action, including

 

5

--------------------------------------------------------------------------------

 

any claims for attorneys’ fees or litigation expenses, whether presently known
or unknown, that it has, has had, or may come to have against PDS, its
affiliates, subsidiaries, parents, predecessors, successors in interest,
officers, directors, employees, agents and representatives, or any one of them,
arising out of the GE Lawsuit, the PDS Lawsuit or the parties’ relationship
under the Trump Sale and Purchase Agreements, the Sharing Agreement, the Pledge
Agreement or the Warrant.  GE retains its right to enforce the provisions of
this Settlement Agreement in an appropriate court of law.

 

Nothing contained herein releases any of PDS’s obligations under any other
agreement between or among the parties.

 

9.             Release By PDS.  On Closing Date, upon payment of the total sum
of $13,111,443.31, plus any accrued interest in escrow account 03090161,
representing the Repurchase Payment plus the Sharing Agreement Payment as
provided in Paragraphs 1-2 above, PDS, for itself and its affiliates,
subsidiaries, parents, predecessors, successors in interest, officers,
directors, employees, agents and representatives, agrees that it releases and
forever discharges GE, its affiliates, subsidiaries, parents, predecessors,
successors in interest, officers, directors, employees, agents and
representatives, from any and all claims, and causes of action, including any
claims for attorneys’ fees or litigation expenses, whether presently known or
unknown, that it has, has had, or may come to have against GE, its affiliates,
subsidiaries, parents, predecessors, successors in interest, officers,
directors, employees, agents and representatives, or any one of them, arising
out of the GE Lawsuit, the PDS Lawsuit or the parties’ relationship under the
Trump Sale and Purchase Agreements, the Sharing Agreement, the Pledge Agreement
or the Warrant.  PDS retains its right to enforce the provisions of this
Settlement Agreement in an appropriate court of law.

 

6

--------------------------------------------------------------------------------

 

Nothing contained herein releases any of GE’s obligations under any other
agreement between or among the parties.

 

10.           Complete Agreement.  The parties acknowledge that this written
Settlement Agreement represents the entire agreement among them regarding the
resolution of the dispute regarding the GE Lawsuit, the PDS Lawsuit and the
parties’ relationship under the Trump Sale and Purchase Agreements, the Sharing
Agreement, the Pledge Agreement and the Warrant, and all prior oral and written
agreements concerning that dispute are merged into this Settlement Agreement
with the intention that the provisions stated herein shall govern the conduct of
the parties.

 

11.           Governing Law.  This Settlement Agreement shall be governed by the
law of the State of New York, without regard to the choice of law principles
applicable under New York law.  Proceedings to enforce the terms of this
Settlement Agreement shall initially be brought in the United States District
Court for the Southern District of New York.  If that court declines to exercise
jurisdiction over the matter, then the parties shall being suit in any other
court of competent jurisdiction in the State of New York.  In the event of any
dispute arising out of or relating to this Settlement Agreement, the prevailing
party shall be entitled to recover reasonable attorneys’ fees, costs and
expenses.

 

12.           Confidentiality.  The parties agree that they will not disclose
the terms and conditions of this Settlement Agreement, except as required to
comply with financial reporting obligations, as ordered by a court of competent
jurisdiction, as necessary to enforce the Settlement Agreement, or as required
by any government gaming authority, including as provided in Paragraph 9 above. 
As such, the parties and their counsel shall not issue any press releases of any
kind concerning this Settlement Agreement, and shall not discuss the terms or
conditions of this Settlement Agreement with any members of the press, unless
such

 

7

--------------------------------------------------------------------------------

 

communications are wholly and solely required as part of discussions relating to
the parties’ respective financial reports.

 

13.           Execution By Multiple Counterparts.  For convenience, the parties
agree that this Settlement Agreement may be executed in duplicate originals,
with each providing the other with an original they have executed.  Upon
signature by all parties, the original signature pages shall be forwarded to
counsel for GE c/o Barbara Steiner, Jenner & Block LLP, One IBM Plaza, Chicago,
IL  60611, who will then assemble the duplicate originals of the entire
agreement with the various original signature pages attached thereto, and will
distribute one duplicate original to counsel for PDS.

 

14.           Assignment.  None of the rights or obligations of any party under
this Settlement Agreement shall be assigned or transferred by any party without
the prior written approval of the other parties hereto, except that any party
hereto may assign any of its rights or obligations hereunder to any of its
“Affiliates” (meaning, with respect to any person, corporation or entity, any
other person, corporation or entity that directly or indirectly controls, is
controlled by or is under common control with, such person, corporation or
entity) with the prior written consent of the other parties hereto, such consent
not to be unreasonably withheld, provided that no such assignment shall relieve
the assigning party of its obligations hereunder.

 

15.           Warranty of Authority.  The undersigned represent that they are
authorized to execute this Settlement Agreement on behalf of the GE and PDS as
indicated, and confirm that they have had an opportunity to consult with their
respective attorneys prior to signing this binding document.

 

WHEREFORE, the parties hereto, through duly authorized representatives as set
forth below, execute this Settlement Agreement, and agree to be bound hereby.

 

8

--------------------------------------------------------------------------------

 

GE CAPITAL CORPORATION

 

 

 

By:

 /s/ Ralph J. Willis

 

 

 

 

Its: 

 Manager - Operations

 

 

 

 

HELLER EMX, INC.

 

 

 

By:

 /s/ Ralph J. Willis

 

 

 

 

Its:

 Vice President

 

 

 

 

HELLER FINANCIAL LEASING, INC.

 

 

 

 

 

By: 

 /s/ Ralph J. Willis

 

 

 

 

 

 

Its:

Vice President

 

 

 

 

PDS GAMING CORPORATION

 

 

 

 

 

By: 

 /s/ Johan P. Finley

 

 

 

 

 

 

Its:

CEO

 

 

 

 

PDS GAMING CORPORATION-NEVADA

 

 

 

 

 

By: 

 /s/ Johan P. Finley

 

 

 

 

 

 

Its:

CEO

 

 

 

9

--------------------------------------------------------------------------------

 

EXECUTION COPY

 

SALE AND PURCHASE AGREEMENT

 

THIS SALE AND PURCHASE AGREEMENT (“Agreement”) is made and effective this
February 27, 2004, by and between PDS GAMING CORPORATION, a Minnesota
Corporation, and PDS GAMING CORPORATION-NEVADA, a Nevada corporation,
(collectively, “PDS”) and HELLER EMX, INC., a Delaware corporation (“EMX”) and
HELLER FINANCIAL LEASING, INC. (“HFL”) (collectively, “Heller”).

 

WHEREAS, PDS previously sold to Heller, non-recourse, certain residuals and
lease payments in six (6) transactions documented in the following agreements
(collectively, the “Repurchase Agreements”):

 

(i)            the Sale and Purchase Agreement, dated as of April 20, 2001, as
amended by Amendment Agreement, dated as of June 2001, between PDS and HFL,
relating to Lease Schedule No. 1, dated March 29, 2001, to a Master Lease
Agreement, dated March 29, 2001, between PDS and Trump Taj Majal Associates;

 

(ii)           the Sale and Purchase Agreement, dated as of May 31, 2001,
between PDS and HFL, relating to Lease Schedule No. 2, dated May 17, 2001, to a
Master Lease Agreement, dated March 29, 2001, between PDS and Trump Taj Majal
Associates;

 

(iii)          the Sale and Purchase Agreement, dated as of June 29, 2001,
between PDS and EMX, relating to Lease Schedule No. 1, dated June 27, 2001, to a
Master Lease Agreement, dated June 27, 2001, between PDS and Trump Plaza
Associates;

 

(iv)          the Sale and Purchase Agreement, dated as of July 2, 2001, between
PDS and EMX, relating to Lease Schedule No. 1, dated June 25, 2001, to a Master
Lease Agreement, dated June 25, 2001, between PDS and Trump’s Castle Associates,
L.P.;

 

(v)           the Sale and Purchase Agreement, dated as of July 20, 2001,
between PDS and EMX, relating to Lease Schedule No. 1, dated June 15, 2001, to a
Master Lease Agreement, dated June 15, 2002, between PDS and Jim’s Enterprises,
Inc.; and

 

(vi)          the Sale and Purchase Agreement, dated as of July 20, 2001,
between PDS and EMX, relating to Lease Schedule No. 1, dated June 15, 2001, to a
Master Lease Agreement, dated June 14, 2001, between PDS and State Line Hotel,
Inc.; and

 

WHEREAS, Heller desires to re-assign, re-transfer and re-convey to PDS on an “as
is, where is” basis without recourse to Heller, and PDS desires to repurchase
and receive from Heller, all of Heller’s right, title and interest in and to the
Purchased Assets sold to Heller by each Repurchase Agreement, excluding any
rental payments which PDS already has forwarded to Heller under the terms of the
Repurchase Agreements (collectively, the “Purchased Assets”), in accordance with
the terms and conditions contained herein.

 

--------------------------------------------------------------------------------

 

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 Agreement as material parts thereof and not simply as
mere recitals.

 

2.             Sale and Purchase.  Heller hereby agrees to assign, transfer and
convey to PDS, and PDS hereby agrees to purchase and receive from Heller, all of
Heller’s right, title and interest in and to the Purchased Assets on an “as is
where is” basis without any representations or warranties of any kind and
without recourse to Heller.

 

3.             Purchase Price.  The purchase price PDS shall pay to Heller for
the Purchased Assets shall be $10,518,041.14 (the “Purchase Price”).  On
March 1, 2004, the Purchase Price shall be paid via a direct wire transfer to
the following account:

 

Bank of America

231 South LaSalle Street

Chicago, Illinois  60697

ABA # 071000039

Acct. # 81-8-841-1298

Acct Name:  Heller EMX, Inc.

 

4.             Termination of the Repurchase Agreements.  Upon payment of the
Purchase Price, the parties agree that all rights and obligations arising under
the Repurchase Agreements are terminated.

 

5.             Miscellaneous Provisions.

 

a.             Attachments, Exhibits or Schedules.  All attachments, exhibits or
schedules to this Agreement, if any, are fully incorporated herein as though set
forth at length.

 

b.             Binding Effect.  This 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.

 

c.             Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, negotiations, representations or
understandings, whether written or oral, between the parties hereto relating to
the subject matter of this Agreement.  Any prior agreements, promises,
negotiations, representations or understandings, either oral or written, not
expressly set forth in this Agreement shall have no force or effect.

 

d.             Execution of Documents.  The parties hereto agree that execution
of a facsimile of this Agreement and any documents, agreements or instruments
incorporated herein

 

--------------------------------------------------------------------------------

 

by reference shall have the same force and effect as an executed original copy
and shall be binding upon the parties.

 

e.             Further Assurances.  The parties further covenant and agree to
do, execute and deliver, or cause to be done, executed and delivered, and
covenant and agree to use their best efforts to cause their successors and
assigns to do, execute and deliver, or cause to be done, executed and delivered,
all such further acts, transfers and assurances, for implementing the intention
of the parties under this Agreement, as the parties reasonably shall request. 
The parties agree to execute any additional instruments or agreements necessary
to effect the intent of this Agreement.

 

f.              Governing Law.  The substantive and procedural laws of the State
of New York shall govern the validity, construction, interpretation, performance
and enforcement of this Agreement without reference to its conflict of laws
provision.  The parties agree to jurisdiction in New York.

 

6.             Warranty of Authority.  The undersigned represent that they are
authorized to execute this Sale and Purchase Agreement on behalf of Heller and
PDS as indicated, and confirm that they have had an opportunity to consult with
their respective attorneys prior to signing this binding document.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date set forth above.

 

 

HELLER EMX, INC.

PDS GAMING CORPORATION

 

 

 

 

By:

/s/ Ralph J. Willis

 

By:

/s/ Johan P. Finley

 

 

 

Its:

Vice President

 

Its:

CEO

 

 

 

HELLER FINANCIAL LEASING, INC.

PDS GAMING CORPORATION-NEVADA

 

 

 

 

By:

/s/ Ralph J. Willis

 

By:

/s/ Johan P. Finley

 

 

 

Its:

Vice President

 

Its:

CEO

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

User Leases

 

PDS File #

 

Original Equip. Cost

 

 

 

 

 

 

 

New Jersey Leases

 

 

 

 

 

Trump Taj Mahal

 

1067-L-0106

 

2,843,799.37

 

Trump Taj Mahal

 

1067-L-0107

 

7,281,304.40

 

Trump Taj Mahal

 

1067-L-0101

 

2,412,976.82

 

Trump Taj Mahal

 

1067-L-0102

 

3,583,350.65

 

Trump Castle

 

1070-L-0101

 

3,197,115.71

 

Trump Marina

 

1070-L-0103

 

1,207,438.46

 

Trump Plaza

 

1071-L-0105

 

1,514,180.56

 

Trump Plaza

 

1071-L-0102

 

2,044,573.66

 

Trump Plaza

 

1071-L-0101

 

6,087,511.53

 

 

 

 

 

 

 

Non-New Jersey Leases

 

 

 

 

 

Jim’s Enterprises

 

1092-L-01-01

 

475,000.00

 

Stateline

 

1093-L-01-01

 

725,000.00

 

Riviera Blackhawk #1

 

1005-L-01-03

 

Need info

 

Riviera Blackhawk Amended #1

 

1005-L-01-01

 

Need info

 

Aladdin Gaming LLC

 

1149-PA-01-01

 

55,376.00

 

Ambassador Gaming dba Key Largo Casino

 

8001-PA-04

 

401,420.00

 

Ambassador Gaming dba Key Largo Casino

 

8001-PA-04-01

 

21,180.00

 

Ambassador Gaming dba Key Largo Casino

 

8001-PA-04-02

 

50,360.00

 

Ambassador Gaming dba Key Largo Casino

 

8001-PA-05

 

45,006.00

 

Ambassador Gaming dba Key Largo Casino

 

8001-PA-06

 

25,180.00

 

Boardwalk Casino Inc.

 

1153-L-01-01

 

43,392.00

 

Boardwalk Casino Inc.

 

1153-L-01-02

 

31,170.00

 

Boardwalk Casino Inc.

 

1153-PA-01-01

 

71,498.00

 

Boardwalk Casino Inc.

 

1153-PA-01-02

 

92,535.00

 

Casablanca Resorts / Oasis

 

1150-PA-01-01

 

165,022.00

 

Casablanca Resorts / Oasis

 

1150-L - 01-03

 

75,010.00

 

Casablanca Resorts / Oasis

 

1150-PA-01-01-01

 

908.00

 

Casablanca Resorts / Oasis

 

1097-PA-01-01

 

135,900.00

 

Green Valley/ Renatas

 

1129-L - 01-02

 

13,950.00

 

Hotel Ramada dba Tropicana

 

1167-PA-01-01

 

103,770.00

 

Jerry’s Nugget

 

1154-PA-01-01

 

101,540.00

 

Best Western / Mardi Gras Inn

 

1157-L-01-03

 

14,520.00

 

Best Western / Mardi Gras Inn

 

1157-L-01-04

 

20,385.00

 

Pakasenta Indians dba Rolling Hills Casino

 

1097-R-01-01

 

124,304.00

 

The Mining Company

 

1164-PA-01-01

 

105,014.00

 

Tuscany Hotel & Casino

 

1163-PA-01-01

 

11,530.00

 

United Coin Machine Company

 

1097-R - 02-01

 

97,950.00

 

United Coin Machine Company

 

9700-PA-01-01

 

52,950.00

 

United Coin Machine Company

 

9700-PA-02-01

 

52,950.00

 

VSS Enterprises dba Castaways

 

1148-PA-01-01

 

463,997.00

 

Harrah’s Cherokee Casino

 

1094-DCS-01-01

 

600,000.00

 

SDG Oklahoma Otoe

 

1013-SP-02-01

 

1,880,850.00

 

SDG Oklahoma Chickasaw

 

1013-SP-03-01

 

501,560.00

 

SDG Oklahoma Choctaw

 

1013-SP-04-01

 

777,418.00

 

SDG Oklahoma Choctaw

 

1013-SP-04-02

 

1,517,219.00

 

SDS Florida Seminole

 

1013-SP-01-01

 

3,934,163.86

 

SDS Florida Seminole

 

1013-SP-01-02

 

1,873,410.00

 

 

--------------------------------------------------------------------------------

 

FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This First Amendment to Amended and Restated Loan and Security Agreement is
entered into as of March 1, 2004, between PDS Gaming Corporation (f/k/a PDS
Financial Corporation) (“Borrower”), a Minnesota corporation, having its
principal place of business at  6171 McLeod Drive, Las Vegas, Nevada 89120, and
General Electric Capital Corporation, a Delaware corporation, having a place of
business at 10 Riverview Drive, Danbury, Connecticut 06810 (“Lender”).

 

WHEREAS, PDS Financial Corporation and Heller Financial, Inc. have heretofore
entered into a certain Loan and Security Agreement dated as of June 20, 1997
(the “Original Loan Agreement”) and a certain Amended and Restated Loan and
Security Agreement dated as of October 28, 1998 (the “Amended Loan Agreement”;
the Original Loan Agreement and the Amended Loan Agreement are hereinafter
collectively referred to as the “Loan Agreement”) (all defined terms used
herein, unless otherwise defined, have the meanings ascribed to them in the Loan
Agreement); and

 

WHEREAS, General Electric Capital Corporation has acquired Heller Financial,
Inc. and the loans subject to the Loan Agreement and PDS Financial Corporation
has changed its name to PDS Gaming Corporation;

 

WHEREAS, Borrower and Lender desire to further amend the Loan Agreement by
amending and restating it in its entirety;

 

NOW, THEREFORE, in consideration of the parties’ mutual undertakings, hereby
evidenced, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that the
provisions of the Original Loan Agreement are hereby amended and restated, so as
to be and read in their collective entirety as amended and restated in the
Amended Loan Agreement, except that the Amended Loan Agreement is hereby revised
as follows:

 

1.  The definition of “Leverage Ratio” found in section 1.1 of the Amended Loan
Agreement is hereby amended by deleting it in its entirety and by inserting the
following in lieu thereof:

 

“Leverage Ratio: with respect to Borrower, as measured on a consolidated basis,
total indebtedness (excluding, subordinated debt, non-recourse debt and deferred
funds for pending transactions) to the sum of Tangible Net Worth plus
subordinated debt.”

 

2.  The definition of “Fixed Charge Coverage Ratio” found in section 1.1 of the
Amended Loan Agreement is hereby amended by deleting it in its entirety and by
inserting the following in lieu thereof:

 

“Fixed Charge Coverage Ratio: with respect to Borrower, as measured on a
consolidated basis, the ratio for any twelve month trailing period of (a) EBITDA
during such period, to (b) interest expense on indebtedness during such period.

 

3.  Sections 7.6, 7.9, 7.10, 7.11and 7.14 of the Amended Loan Agreement are
hereby amended by deleting them in their entireties and by inserting the
following in lieu thereof:

 

“7.6        Merger and Acquisition. Except for the merger of Borrower into PDS
Acquisition Company, a Nevada Corporation and the consolidation of Borrower into
PDS Holding Corporation, a Nevada corporation (and as long as the new entity
assumes all of Borrower’s obligations hereunder and Borrower agrees to provide
to Lender documents satisfactory to Lender to evidence such merger,
consolidation and assumption of obligations), shall not, without the prior,
written consent of Lender, which consent will not be unreasonably withheld or
delayed, consolidate with or merge into any Person, or acquire all or
substantially all of the stock or Property of any Person.

 

7.9          Transactions with Affiliates. Shall not, except for (i)
transactions in the normal course of business, which transactions comply with
the provisions of clauses (y) and (z) of this Section 7.9, and (ii) purchases of
Equipment from and the payment of certain management fees to PDS Holding
Corporation, which

 

--------------------------------------------------------------------------------

 

purchases and fee payments shall comply with the provisions of clauses (y) and
(z) of this Section 7.9, sell, lease, assign, transfer or otherwise dispose of
any Property to any Affiliate or lease Property, render or receive services or
purchase assets from any Affiliate, except with the prior written consent of
Lender, which consent shall not unreasonably be withheld or delayed, and except
that Borrower may enter into any such transaction with any such Affiliate in the
ordinary course of business if (y) the monetary or business consideration
arising therefrom would be substantially as advantageous to Borrower as the
monetary or business consideration which would be obtained by Borrower in a
comparable arm’s-length transaction with a Person which is not an Affiliate and
(z) no other provision of this Agreement would be violated as a result thereof.

 

7.10        Tangible Net Worth. Shall not allow Borrower’s Tangible Net Worth to
be less than $5,000,000 as of 12/31/03 and thereafter.

 

7.11        Fixed Charge Coverage Ratio. Shall not allow Borrower’s Fixed Charge
Coverage Ratio to be less than 1.50 to 1.00 at 12/31/03 and thereafter.

 

7.14        Inventory Finance Line. Shall maintain an inventory finance line
with a financial institution reasonably acceptable to Lender and Borrower in an
amount not less than One Million Dollars ($1,000,000.00).”

 

3.  Section 9.3 of the Amended Loan Agreement is hereby amended by deleting it
in its entirety and by inserting the following in lieu thereof:

 

“9.3        Communications. All notices, consents, approvals and other
communications under the Loan Documents shall be in writing and shall be (i)
delivered in person, (ii) sent by telephonic facsimile (“FAX”) or (iii) mailed,
postage prepaid, either by (A) registered or certified mail, return receipt
requested, or (B) overnight express carrier, addressed in each case as follows:

 

To Lender:  General Electric Capital Corporation

 

10 Riverview Drive

 

Danbury, CT 06810

 

Attn: DVF Legal

 

FAX No.: (203) 749-4592

 

 

To Borrower:  PDS Gaming Corporation

 

Attention: Johan P. Finley, CEO

 

6171 McLeod Drive

 

Las Vegas, NV 89120

 

FAX No.: (702) 740-8692

 

 

with a copy to:  Jones Vargas

 

Attention: Mike Alonso, Esq.

 

201 W. Liberty Street

 

P.O. Box 281

 

Reno, NV 89504

 

FAX No.: (702) 786-1177

 

or to such other address, as to either of the parties hereto, as such party
shall designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 9.3 shall be deemed received (i) if sent
by FAX during regular business hours, on the day sent if a Business Day, or if
such day is not a Business Day (or a Business Day after regular business hours),
then on the next Business Day, (ii) if sent by overnight, express carrier, on
the next Business Day immediately following the day sent, or (iii) if sent by
registered or certified mail, on the fifth Business Day following the day sent.”

 

This Agreement has been executed and delivered by each of the parties hereto by
a duly authorized officer of each such party on the date first set forth above.

 

--------------------------------------------------------------------------------

 

GENERAL ELECTRIC CAPITAL
CORPORATION

PDS GAMING CORPORATION

 

 

By:

/s/ Dennis Duffany

 

By:

/s/ Johan P. Finley

 

 

 

Print Name:

Dennis Duffany

 

Print Name:

Johan P. Finley

 

 

 

Title:

Collection Mgr.

 

Title:

CEO

 

 

--------------------------------------------------------------------------------

 

FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This First Amendment to Amended and Restated Loan and Security Agreement is
entered into as of March 1, 2004 between PDS Gaming Corporation – Nevada (f/k/a
PDS Financial Corporation - Nevada) (“Borrower”), a Nevada corporation, having
its principal place of business at 6171 McLeod Drive, Las Vegas, Nevada 89120,
and General Electric Capital Corporation, a Delaware corporation, having a place
of business at 10 Riverview Drive, Danbury, Connecticut 06810 (“Lender”).

 

WHEREAS, PDS Financial Corporation - Nevada and Heller Financial, Inc. have
heretofore entered into a certain Loan and Security Agreement dated as of
June 20, 1997 (the “Original Loan Agreement”) and a certain Amended and Restated
Loan and Security Agreement dated as of October 28, 1998 (the “Amended Loan
Agreement”; the Original Loan Agreement and the Amended Loan Agreement are
hereinafter collectively referred to as the “Loan Agreement”) (all defined terms
used herein, unless otherwise defined, have the meanings ascribed to them in the
Loan Agreement); and

 

WHEREAS, General Electric Capital Corporation has acquired Heller Financial,
Inc. and the loans subject to the Loan Agreement and PDS Financial Corporation –
Nevada has changed its name to PDS Gaming Corporation - Nevada;

 

WHEREAS, Borrower and Lender desire to further amend the Loan Agreement by
amending and restating it in its entirety;

 

NOW, THEREFORE, in consideration of the parties’ mutual undertakings, hereby
evidenced, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that the
provisions of the Original Loan Agreement are hereby amended and restated, so as
to be and read in their collective entirety as amended and restated in the
Amended Loan Agreement, except that the Amended Loan Agreement is hereby revised
as follows:

 

1.  Sections 7.6 and 7.11 of the Amended Loan Agreement are hereby amended by
deleting them in their entireties and by inserting the following in lieu
thereof:

 

“7.6        Merger and Acquisition. Except for the merger or consolidation of
Borrower into PDS Holdings Corporation, a Nevada corporation (and as long as the
new entity assumes all of Borrower’s obligations hereunder and Borrower agrees
to provide to Lender documents satisfactory to Lender to evidence such merger,
consolidation and assumption of obligations), shall not, without the prior,
written consent of Lender, which consent will not be unreasonably withheld or
delayed, consolidate with or merge into any Person, or acquire all or
substantially all of the stock or Property of any Person.

 

7.11        Inventory Finance Line. Shall maintain, in conjunction with PDS
Gaming Corporation, an inventory finance line with a financial institution
reasonably acceptable to Lender and Borrower in an amount not less than One
Million Dollars ($1,000,000.00).”

 

2.  Section 9.3 of the Amended Loan Agreement is hereby amended by deleting it
in its entirety and by inserting the following in lieu thereof:

 

“9.3        Communications. All notices, consents, approvals and other
communications under the Loan Documents shall be in writing and shall be (i)
delivered in person, (ii) sent by telephonic facsimile (“FAX”) or (iii) mailed,
postage prepaid, either by (A) registered or certified mail, return receipt
requested, or (B) overnight express carrier, addressed in each case as follows:

 

--------------------------------------------------------------------------------

 

To Lender:  General Electric Capital Corporation

 

10 Riverview Drive

 

Danbury, CT 06810

 

Attn: DVF Legal

 

FAX No.: (203) 749-4592

 

 

To Borrower:  PDS Gaming Corporation - Nevada

 

Attention: Johan P. Finley, CEO

 

6171 McLeod Drive

 

Las Vegas, NV 89120

 

FAX No.: (702) 740-8692

 

 

with a copy to:  Jones Vargas

 

Attention: Mike Alonso, Esq.

 

201 W. Liberty Street

 

P.O. Box 281

 

Reno, NV 89504

 

FAX No.: (702) 786-1177

 

or to such other address, as to either of the parties hereto, as such party
shall designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 9.3 shall be deemed received (i) if sent
by FAX during regular business hours, on the day sent if a Business Day, or if
such day is not a Business Day (or a Business Day after regular business hours),
then on the next Business Day, (ii) if sent by overnight, express carrier, on
the next Business Day immediately following the day sent, or (iii) if sent by
registered or certified mail, on the fifth Business Day following the day sent.”

 

This Agreement has been executed and delivered by each of the parties hereto by
a duly authorized officer of each such party on the date first set forth above.

 

GENERAL ELECTRIC CAPITAL
CORPORATION

PDS GAMING CORPORATION

 

 

By:

/s/ Dennis Duffany

 

By:

/s/ Johan P. Finley

 

 

 

Print Name:

Dennis Duffany

 

Print Name:

Johan P. Finley

 

 

 

Title:

Collection Mgr.

 

Title:

CEO

 

 

--------------------------------------------------------------------------------