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