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AMENDED AND RESTATED AGREEMENT FOR

TECHNOLOGY TRANSFER, MANUFACTURE,

DISTRIBUTION AND AFFECTING PATENT,

TRADEMARK AND COPYRIGHTS  

(Sovereign Nations)  

DIGIDEAL CORPORATION

AND

PDS FINANCIAL  

 
TABLE OF CONTENTS  

	 
	 	 
	 	 

	1.	 	Parties	 	1
	

2.	
 	

Background	
 	

1
	

3.	
 	

Definitions and Subject Matter	
 	

2
	

4.	
 	

Objectives	
 	

4
	

5.	
 	

Scope of Rights Limited to Specified Designated Products	
 	

4
	

6.	
 	

Grant of Exclusive Rights	
 	

4
	

7.	
 	

Agreement to Transfer Rights	
 	

5
	

8.	
 	

Subject Matter Under Obligation To Transfer	
 	

5
	

9.	
 	

Option to Repurchase Rights	
 	

6
	

10.	
 	

Reservation of Rights	
 	

6
	

11.	
 	

Geographical Scope of this Agreement	
 	

6
	

12.	
 	

RESERVED	
 	

6
	

13.	
 	

License Fees	
 	

7
	

14.	
 	

Granting of Subordinate Rights	
 	

7
	

15.	
 	

Grant of Trademark License	
 	

8
	

16.	
 	

Geographical Scope of Trademark License	
 	

8
	

17.	
 	

License to Sublicense Trademarks	
 	

8
	

18.	
 	

Quality Control Involving Trademarks	
 	

9
	

19.	
 	

Marking of Trademarks and No Re-Branding	
 	

9
	

20.	
 	

License of Copyright Works	
 	

10
	

21.	
 	

Prototype	
 	

10
	

22.	
 	

Transfer of Support Documentation	
 	

10
	

23.	
 	

Commercial Production of Designated Product	
 	

10
	

24.	
 	

Components Used in Production of Designated Product	
 	

10
	

25.	
 	

Costs of Production for Designated Product	
 	

11
	

26.	
 	

Installation and Setup of Designated Product	
 	

11
	

27.	
 	

Initial Charges	
 	

11
	

28.	
 	

Revenue from Rentals and Sales	
 	

11
	

29.	
 	

Handling of Revenue from Designated Products	
 	

12
	

30.	
 	

Reporting of Revenue and Designated Products	
 	

12
	

31.	
 	

Other Types of Revenue	
 	

13
	

32.	
 	

Ownership of Designated Product	
 	

13

i

 

	

33.	
 	

Currency and Money	
 	

13
	

34.	
 	

Accounting Audits	
 	

13
	

35.	
 	

SaIes Versus Rentals	
 	

14
	

36.	
 	

Sublicensing	
 	

14
	

37.	
 	

Certifying and Licensing of Designated Products	
 	

15
	

38.	
 	

Licensing With Gaming Commissions	
 	

15
	

39.	
 	

Installation, Servicing and Maintenance of Designated Product	
 	

16
	

40.	
 	

Technical Support and Reimbursement for Expenses	
 	

16
	

41.	
 	

Confidentiality of Disclosure and Designated Technology	
 	

17
	

42.	
 	

RESERVED	
 	

17
	

43.	
 	

RESERVED	
 	

17
	

44.	
 	

Patent Applications	
 	

17
	

45.	
 	

Registration of License	
 	

18
	

46.	
 	

Minimum Performance by PDS Financial	
 	

18
	

47.	
 	

Improvements and Developments in Designated Technology	
 	

19
	

48.	
 	

Employee Invention Agreements	
 	

19
	

49.	
 	

Marking of Products Embodying Patent Rights and Copyrights	
 	

19
	

50.	
 	

Assignment and Ownership	
 	

20
	

51.	
 	

Warranties of DigiDeal	
 	

20
	

52.	
 	

Disclaimer of Warranties by DigiDeal	
 	

20
	

53.	
 	

Warranties of PDS Financial	
 	

20
	

54.	
 	

Disclaimer of Warranties by PDS Financial	
 	

20
	

55.	
 	

Enforcement of Patent and Other Exclusive Rights Against Infringers	
 	

21
	

56.	
 	

Notification of Infringement	
 	

21
	

57.	
 	

Claims From Third Parties	
 	

21
	

58.	
 	

Covenants Not To Compete	
 	

22
	

59.	
 	

Compliance with Export of Technology and Other Laws	
 	

23
	

60.	
 	

Conversion To Non-Exclusive	
 	

23
	

61.	
 	

Effect of Conversion	
 	

24
	

62.	
 	

Termination by DigiDeal	
 	

24
	

63.	
 	

Effect of Termination by DigiDeal	
 	

24
	

64.	
 	

Termination by PDS Financial	
 	

25
	

65.	
 	

Effect of Termination by PDS Financial	
 	

25
	

66.	
 	

Modification of Agreement	
 	

25

ii

 

	

67.	
 	

No Waiver	
 	

26
	

68.	
 	

Severability	
 	

26
	

69.	
 	

Force Majeure	
 	

26
	

70.	
 	

Applicable Law	
 	

26
	

71.	
 	

Jurisdiction and Venue	
 	

26
	

72.	
 	

Notices	
 	

26
	

73.	
 	

Relationship of the Parties	
 	

26
	

74.	
 	

Attorney's Fees	
 	

26
	

75.	
 	

Integration, Entire Agreement	
 	

27
	

76.	
 	

Counterpart Original Agreements	
 	

27
	

77.	
 	

Effective Date of Agreement and Term of Agreement	
 	

27
	

78.	
 	

Arbitration	
 	

27
	

79.	
 	

Execution by DigiDeal—DigiDeal Corporation	
 	

28
	

80.	
 	

Execution by PDS Financial—PDS Financial	
 	

29
	

81.	
 	

Appendix A—Designated Trademarks	
 	

30
	

82.	
 	

Appendix B—Exemplary Mortgage	
 	

31

iii

  

	 
	 	 
	 	 
	 	 
	 	 
	 	 

	1.	 	PARTIES	 	 
	 	 	1.1	 	This Agreement, effective August 31, 1999, is made by and between:
	 	 	 	 	(a)	 	DIGIDEAL CORPORATION, a Nevada corporation, whose business address is 811 South Sixth Street, Las Vegas, NV 89101, (hereinafter referred to as "DIGIDEAL" for convenience)- and,
	 	 	 	 	(b)	 	PDS FINANCIAL CORPORATION, a corporation organized under the laws of Minnesota, and its subsidiaries and affiliates, whose address is 6171 McLeod Drive, Las Vegas, NV 89120-4048, (collectively hereinafter referred to as
"PDS FINANCIAL" for convenience).
	
2.	
 	

BACKGROUND	
 	

 
	 	 	2.1	 	DIGIDEAL has acquired and has developed improved technology directed to apparatuses and methods for playing live participant table card games using automated electronic table card game systems with electronic card displays
for multiple participants. DIGIDEAL has devoted substantial time, effort and money to that development and now intends to transfer technology to PDS FINANCIAL. This transfer of technology is intended to facilitate and authorize PDS FINANCIAL to
additionally develop the planned product, to bring the planned product to commercialization, and allow manufacture of the planned product.
	 	 	2.2	 	As a result of DIGIDEAL's activities it now owns certain technology, including patent application rights, copyrights, trademarks, trade secrets, knowhow and other proprietary information relating to such
technology.
	 	 	2.3	 	PDS FINANCIAL is involved with and interested in manufacturing and promoting equipment and games used in the gaming industry. PDS FINANCIAL desires to acquire rights in the technology developed by or for DIGIDEAL and to
manufacture, distribute, sell, lease, use, service, and promote products utilizing such technology, or license or sublicense others to do so.
	 	 	2.4	 	It is the intent of the parties to provide for a business relationship wherein DIGIDEAL will be supplying technology, proprietary rights, and will be supplying non-gaming device components to be used by PDS FINANCIAL. It is
also the intent of the parties that PDS FINANCIAL will be manufacturing and assembling the systems. PDS FINANCIAL also will be programming the software, which will be used as part of the systems and which will control operation of the systems. PDS
FINANCIAL will thus be controlling the manufacture of the systems and controlling the distribution of the systems to the gaming industry by either renting the systems or selling them to casinos or other users.
	 	 	2.5	 	It is also the intent of the parties to provide for transfer of technology from DIGIDEAL to PDS FINANCIAL to facilitate the manufacture, assembly and programming of the gaming systems. This will enhance development and aid
in focused control of the finished product and software by PDS FINANCIALto better serve the industry and provide security in the production of the finished product. To this end, various technical developments will be confidentially disclosed to PDS
FINANCIAL, and there will be a transfer of patent and copyrights for the inventions and software associated with the technology being transferred and used in the systems, which will be produced and distributed by PDS FINANCIAL.
	 	 	2.6	 	In consideration of the premises, covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto have agreed to the terms and conditions provided in this Agreement.
	***  Confidential treatment requested pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Page 1 of 31

 

	
3.	
 	

DEFINITIONS AND SUBJECT MATTER
	 	 	3.1	 	Original Patent Application—DIGIDEAL is the owner of all right, title, and interest in certain inventions described in a U.S. Patent Application Serial No. 09/041,373 entitled "Automated
System For Playing Live Casino Table Games Having Tabletop Changeable Playing Card Displays and Play Monitoring Security Features", filed March 11, 1998. Such patent application shall be referred to as the original patent
application.
	 	 	3.2	 	First C-I-P Patent Application—DIGIDEAL is also the owner of all right, title, and interest in certain inventions described in a U.S. Patent Application Serial No. 09/159,813 entitled
"Automated System For Playing Live Casino Table Games Having Tabletop Changeable Playing Card Displays and Play Monitoring Security Features", filed September 23, 1998. Such patent application shall be referred to as the first C-I-P patent
application. The first C-I-P patent application also includes a related Patent Cooperation Treaty, application serial No. PCT/US99/05361, filed March 11, 1999 of the same title and disclosure as the first C-I-P patent application.
	 	 	3.3	 	Second C-I-P Patent Application—DIGIDEAL is also the owner of all right, title, and interest in certain inventions described in a U.S. Patent Application Serial No. 09/301,267 entitled
"Automated System For Playing Live Casino Table Games Having Tabletop Changeable Playing Card Displays and Play Monitoring Security Features", filed April 27, 1999. Such patent application shall be referred to as the second C-I-P patent
application. The Second C-I-P patent application also includes a related Patent Cooperation Treaty, Application Serial No. PCT/US99/22192, filed September 23, 1999 of same title and disclosure as the Second C-I-P patent application.
	 	 	3.4	 	Ancillary Patent Application—DIGIDEAL is also the owner by assignment of all right, title, and interest in certain inventions described in a U.S. Patent Application Serial No. 09/215,391
filed December 18, 1998 entitled "Method of Playing Blackjack with a Side Wager". Such patent application and any resulting continuations or divisional are referred to herein as the ancillary patent application.
	 	 	3.5	 	The Inventions—The term "The Inventions" (both capitalized) will include those inventions described in the original patent application and the ancillary patent application. The Inventions
shall also include those inventions, which are disclosed in said original patent application, the ancillary patent application and the first and second C-I-P applications, whether there are claims in such patent applications when filed, or if such
patent applications are later amended to include such claims. The Inventions shall also include inventions which are the subject of any further patent application or patent applications which are either a continuation or divisional patent application
based upon the original patent application, the ancillary patent application or said C-I-P applications, which lawfully claims patent rights which have a valid claim or right to claim priority based upon the original patent application, the ancillary
patent application or said C-I-P applications. Any subsequent continuation-in-part applications filed based upon said original patent application or the ancillary patent application will be considered part of The Inventions to the extent of any
patent claims contained therein are issued as a patent from a subsequent continuation-in-part application and are supportable upon the original disclosures of the original patent application, ancillary patent application or the first and second C-I-P
applications, or to the extent of the issued patent claims based upon such subsequent continuation-inpart application have a scope which falls within the scope of any other patent claim covering The Inventions which is supportable upon the disclosure
of the original patent application, the ancillary patent application, or first or second C-I-P applications.
	 	 	3.6	 	The Inventions, Additional Aspects
	 	 	 	 	(a)	 	The Inventions also includes improvements as specifically provided for in part 47.

Page 2 of 31

 

	 	 	 	 	(b)	 	The Inventions also includes any inventions included in any patent application filed on Designated Technology as defined hereinafter.
	 	 	3.7	 	The Patents—The original patent application, any patents resulting from said original patent application either directly or indirectly, and any other patent applications or patents granted on
The Inventions will be referred to herein as "The Patents".
	 	 	3.8	 	The Patent Rights—The term "Patent Rights" (both capitalized) shall refer to any patent rights on The Inventions which issue in patents which have legal effect within the Designated
Territories.
	 	 	3.9	 	Designated Technology—In addition to the technical information contained in The Patents, other related technical and business information have also been developed by DIGIDEAL generally
relating to The Inventions described in the above-referenced patent applications and prototypes and subsequent designs developed since the filing of the original patent application. Exclusive rights under the laws of trade secrets and know-how
protect much or all of such proprietary information. The Inventions, all Patent Rights which may be granted thereon, and related trade secrets, know-how and other proprietary information are under this Agreement and are hereinafter referred to for
convenience and brevity as "Designated Technology".
	 	 	3.10	 	Designated Technology Rights—DIGIDEAL has exclusive property rights or claims to exclusive property rights under the laws of the United States and foreign countries in such Designated
Technology including potential patent rights (Patent Rights), copyrights (The Copyrights), trade secret rights, know-how rights and technical information rights. Such exclusive rights shall herein be referred to collectively as the Designated
Technology Rights.
	 	 	3.11	 	The Copyright Works—DIGIDEAL may provide or hereafter develop, in-full or in-part, works in which copyrights exists. These works shall be referred to as "The Copyright Works" and may include
certain writings, computer software, business plans, technical descriptions, drawings, graphical works, promotional materials, writings, videos, sound recordings and/or other works produced by or for DIGIDEAL which relate to the Designated Technology
and the business related thereto. Such works are also under this Agreement and are hereinafter referred to as "The Copyright Works". The subject matter considered within The Copyright Works may include proprietary, trade secret or know-how
information which fall within the definition of Designated Technology. Additionally, there may be works within The Copyright Works which exist for the written, graphic or other expression which is legally and conceptually separable from the
technological content being expressed. Such expressions are protected under The Copyrights associated with The Copyright Works, and The Copyrights associated therewith may outlive any other exclusive rights in the Designated Technology.
	 	 	3.12	 	The Copyrights—The copyrights attendant to The Copyright Works shall herein be referred to as "The Copyrights" (both capitalized).
	 	 	3.13	 	Designated Trademarks—DIGIDEAL further desires to grant rights in certain trademarks, which may be created for use in connection with the Designated Technology and which are more particularly
described on Appendix A to this Agreement. Any such trademarks are agreed by the parties to be considered under this Agreement, and herein referred to as "Designated Trademarks". Further trademarks
may be added to the subject matter of Designated Trademarks through written Trademark Addenda submitted by DIGIDEAL and accepted by PDS FINANCIAL.
	 	 	3.14	 	Designated Trademark Rights—The rights associated with such Designated Trademarks are the "Designated Trademark Rights".

Page 3 of 31

 

	 	 	3.15	 	Designated Products—Products which use the Designated Technology are herein referred to as "Designated Products". Use of the Designated Technology for purposes of this definition shall
include products which incorporate designs which are based on the Designated Technology, products which use any processes included in the Designated Technology, and products which are produced using any new production processes included in the
Designated Technology.
	 	 	3.16	 	Designated Territory—Part 11 defines the term Designated Territory as used in this Agreement.
	
4.	
 	

OBJECTIVES	
 	

 
	 	 	4.1	 	PDS FINANCIAL—PDS FINANCIAL wishes to obtain Designated Technology, including proprietary information embodying and describing the Designated Technology and to obtain and/or license rights
under The Patents, Designated Technology Rights, The Copyrights and Designated Trademark Rights for purposes of conducting business using such Designated Technology, The Copyrights and Designated Trademarks. With regard to licensed rights, PDS
FINANCIAL also desires to obtain authority to sublicense others who will participate in the distribution of the Designated Product.
	 	 	4.2	 	DIGIDEAL—DIGIDEAL wishes to transfer technology to PDS FINANCIAL and gain revenue from the commercialization of Designated Products.
	
5.	
 	

SCOPE OF RIGHTS LIMITED TO SPECIFIED DESIGNATED PRODUCTS
	 	 	5.1	 	The rights granted to PDS FINANCIAL hereunder shall only apply to Designated Products which are included within the following definition, or as otherwise agreed by the parties hereto in writing:
	 	 	 	 	Gaming systems which utilize automated electronically controlled visual displays which during the play of games include traditional playing card depictions. The traditional playing card depictions are displayed by said
visual displays, said gaming systems being adapted for play by at least one dealer and at least one player who are physically present in a single room to play a card game using such playing card depictions.
	

The above definition includes three systems under development, which are trademarked as "Digital 21", "SlotJack" and "Bonanza BlackJack" and any future version of these games.
	 	 	5.2	 	The rights granted herein also do not extend to any other products beyond the specification contained in the above paragraph 5.1 unless agreed to in writing by DIGIDEAL.
	 	 	5.3	 	The rights granted herein do not extend to new products beyond the specification contained in the above paragraph 5.1 unless agreed to in writing by DIGIDEAL.
	
6.	
 	

GRANT OF EXCLUSIVE RIGHTS
	 	 	6.1	 	DIGIDEAL hereby grants to PDS FINANCIAL certain exclusive rights as detailed below within the Designated Territories (see part 11):
	 	 	 	 	(a)	 	The rights to manufacture, assemble, produce, program, reprogram, market, promote, lease, use, sell, service, repair, recover (repossess), and remanufacture products which are within The Patent Rights and which are
otherwise within the scope of the rights being licensed in the Designated Products under this Agreement;
	 	 	 	 	(b)	 	The rights to practice or otherwise use any methods or processes which are within The Patent Rights and which are otherwise within the scope of the rights being licensed in the Designated Products under this
Agreement;

Page 4 of 31

 

	 	 	 	 	(c)	 	The rights to manufacture, assemble, produce, program, reprogram, market, promote, lease, use, sell, service, repair, recover, and remanufacture products which are leased or sold using The Trademarks or which otherwise
utilize The Trademark Rights in connection therewith;
	 	 	6.2	 	The rights provided in this part include exclusive rights which are within The Patent Rights and which are otherwise within the scope of the rights being licensed in the Designated Products under this Agreement.
	
7.	
 	

AGREEMENT TO TRANSFER RIGHTS
	 	 	7.1	 	DIGIDEAL agrees to transfer to PDS FINANCIAL rights as provided for in section 8, subject to the following terms, conditions and limitations.
	 	 	7.2	 	The provisions of this section involving assignment of ownership rights to PDS FINANCIAL shall only apply to North America and are subject to the limitations of part 12.
	 	 	7.3	 	DIGIDEAL will transfer to PDS FINANCIAL the property rights subject to the obligation of section 8 immediately after being notified by PDS FINANCIAL, and conditioned upon full payment to DIGIDEAL of the amounts owed by
PDS FINANCIAL under the provisions of section 13.1 (a). Notification by PDS FINANCIAL will be in writing and provide: a) a statement that transfer of the property right or rights is needed in accordance with this Agreement; and, b) an
explanation that at least one of the following events has occurred which triggers this provision for transfer-
	 	 	 	 	(a)	 	Upon PDS FINANCIAL submitting the Designated Product in an effort to obtain the license or licenses from the Nevada Gaming Commission which allow PDS FINANCIAL to exercise the rights provided for in part 6.1
(a);
	 	 	 	 	(b)	 	If PDS FINANCIAL is in production and actively distributing the Designated Product in any jurisdiction within the Designated Territory.
	 	 	7.4	 	Any rights not authorized to be practiced by PDS FINANCIAL under the terms of this Agreement are exclusively licensed back to DIGIDEAL with regard to any of The Patents which have been transferred to PDS FINANCIAL under the
terms of part 7.
	 	 	7.5	 	Prior to any transfer of one or more patents from DIGIDEAL to PDS FINANCIAL which comprise The Patents, PDS FINANCIAL shall execute a mortgage of patent rights in favor of DIGIDEAL. Such mortgage of patent rights shall be
executed by a corporate officer of PDS FINANCIAL, be notarized, and shall bear the corporate seal, if a seal is available. The mortgage of patent rights shall be delivered in original form to DIGIDEAL or their agent who shall have the mortgage of
patent rights officially recorded with the U.S. Patent and Trademark Office, or any other appropriate patent office or other authority relating to the Designated Territory.
	 	 	7.6	 	The mortgage shall secure the obligations owed by PDS FINANCIAL to pay DIGIDEAL under the terms of this Agreement. Failure of PDS FINANCIAL to make all payments owed to DIGIDEAL under this Agreement shall be a default which
can be remedied by foreclosure upon the mortgage of patent rights. See Appendix B to this Agreement.
	
8.	
 	

SUBJECT MATTER UNDER OBLIGATION TO TRANSFER
	 	 	8.1	 	The obligation to transfer rights as provided for in part 7 shall apply to the following property rights:
	 	 	 	 	(a)	 	Patent rights contained in pending patent applications and issued patent rights included within The Patent Rights which are effective within the United States of America.
	 	 	 	 	(b)	 	Registered Copyrights on all Copyright Works which are incorporated into the Designated Product as leased or sold which are effective within the United States of America.

Page 5 of 31

 

	
9.	
 	
OPTION TO REPURCHASE RIGHTS
	 	 	9.1	 	DIGIDEAL shall have an option to repurchase any and all rights which have been transferred under the provisions of part 7. The option to repurchase shall be exercisable upon the following conditions-.
	 	 	 	 	(a)	 	If PDS FINANCIAL loses its license with the Nevada Gaming Commission or other applicable authority of the state of Nevada with regard to manufacturing or distributing Designated Product, and PDS FINANCIAL cannot achieve
reinstatement within one (1) year after losing said license.
	 	 	 	 	(b)	 	If PDS FINANCIAL loses its license with three (3) or more gaming commissions of states other than the state of Nevada with regard to manufacturing or distributing Designated Product, and PDS FINANCIAL cannot achieve
reinstatement within one (1) year in at least one of the three states.
	 	 	 	 	(c)	 	If PDS FINANCIAL is terminated under the provisions of this Agreement.
	 	 	9.2	 	The option to repurchase shall be exercised by notifying PDS FINANCIAL in writing that DIGIDEAL wants to exercise the option provided for in this section. DIGIDEAL shall tender payment in the amount of One Thousand Dollars
($1,000) along with the written notification that it is exercising this option. PDS FINANCIAL shall then execute an assignment of patent rights covering the patent or patents for which the option is being exercised. The option shall apply to one or
more patents which are within the definition of The Patents.
	
10.	
 	

RESERVATION OF RIGHTS
	 	 	10.1	 	Any rights not authorized to be practiced by PDS FINANCIAL under the terms of this Agreement are specifically reserved by DIGIDEAL with regard to any of The Patents which are not transferred to PDS FINANCIAL under the terms
of part 7.
	 	 	10.2	 	Any non-patent rights not authorized to be practiced by PDS FINANCIAL under the terms of this Agreement are specifically reserved by DIGIDEAL.
	
11.	
 	

GEOGRAPHICAL SCOPE OF THIS AGREEMENT
	 	 	11.1	 	The rights granted under this Agreement shall apply to the following Designated Territories except as otherwise specifically limited—
	 	 	 	 	(a)	 	Any and all United States American Indian Tribes as defined by the Indian Gaming Regulatory Act, 25 U.S.C. §2701 et seq. ("Indian Tribes").
	
12.	
 	

RESERVED.	
 	

 

Page 6 of 31

  

	 
	 	 
	 	 
	 	 
	 	 
	 	 

	13.	 	LICENSE FEES
	 	 	13.1	 	PDS FINANCIAL shall pay DIGIDEAL license fees totaling *** Dollars ($***U.S.).
	 	 	 	 	(a)	 	A first portion of the license fees shall be paid in the form of a single payment in the amount of *** *** ($*** U.S.). The first portion payment must be paid at the time this Agreement is
signed by both parties.
	 	 	 	 	 	 	(1)	 	The first portion payment must be fully received by DIGIDEAL without dishonor or other impediment to DIGIDEAL's complete ownership thereof no later than ten (10) days after the effective date of this Agreement, or else
this Agreement shall be automatically void ab initio
	 	 	 	 	 	 	(2)	 	The first portion license fee is subject to refund during a waiting period of thirty days (30) beginning on the effective day of this Agreement. Such refund will be made if PDS FINANCIAL demonstrates a reasonable basis
for terminating the Agreement based upon further analysis of patent issues. If such refund is requested then the Agreement will terminate without cure unless the parties subsequently reinstate the Agreement in writing. Refund shall be made by
DIGIDEAL within ten (10) days of demand by PDS FINANCIAL in writing.
	 	 	 	 	 	 	(3)	 	The first portion license fee is subject to refund if Gaming Laboratories International ("GLI") does not approve the Designated Product for manufacture or sale to Indian Tribes within two years from the effective date of
this Agreement. If PDS FINANCIAL elects to have this amount refunded, then DIGIDEAL shall be empowered to terminate this Agreement without any opportunity to cure and without any waiting period. If desired, DIGIDEAL can terminate this Agreement after
PDS FINANCIAL seeks refund and such termination will become effective upon payment of the refund for the first portion license fee. Any fees actually paid for other portions of the license fee shall not be subject to refund.
	 	 	 	 	(b)	 	A second portion of the license fees shall be paid in the form of *** (***) payments of *** Dollars ($*** U.S.) each for a total of *** Dollars ($*** U.S.).
The *** payment of *** Dollars ($*** U.S.) shall be paid upon execution of this amended agreement. The remaining***(***) payments of *** Dollars ($*** U.S.) each shall be
paid *** days following the execution of the amended agreement.
	 	 	13.2	 	All licensee fees paid are non-refundable except as provided for above in connection with the first portion of the license fees.
	
14.	
 	

GRANTING OF SUBORDINATE RIGHTS
	 	 	14.1	 	DIGIDEAL hereby grants to PDS FINANCIAL rights to license or sublicense one or more of the rights granted to PDS FINANCIAL under this Agreement, subject to the following conditions and limitations.
	 	 	14.2	 	Any rights granted by PDS FINANCIAL to third parties must be within the scope of the associated rights granted to PDS FINANCIAL hereunder. If the rights of PDS FINANCIAL hereunder are subject to termination or diminishment
in any respect, then any grant of rights by PDS FINANCIAL to third parties must similarly be subject to termination or diminishment in the same regard. Any failure on the part of PDS FINANCIAL to adequately provide limitations in agreements with
third parties shall not work to limit DIGIDEAL's rights under this Agreement and shall be considered a material breach under this Agreement.

Page 7 of 31

 

	 	 	14.3	 	PDS FINANCIAL warrants that it will only enter into agreements with any third parties which contain full provisions limiting the third party's rights relative to DIGIDEAL. PDS FINANCIAL further warrants that in any and all
agreements with third parties granted under this Agreement, that language will be included indicating that the Agreement has been entered into in furtherance of an agreement with DIGIDEAL and that DIGIDEAL may have rights which affect the agreement
with third parties and acknowledging that rights held by DIGIDEAL may affect rights of any such third party.
	 	 	14.4	 	PDS FINANCIAL shall have the authority to grant subordinate rights allowing third parties to exclusively or non-exclusively practice the following rights within the scope of rights licensed to PDS FINANCIAL under
part 6. Any grant of subordinate rights shall only cover a portion of the Designated Territory, or a portion of the commercial areas contained within the Designated Territory and authorized field of use limitations provided for
herein.
	 	 	14.5	 	PDS FINANCIAL is empowered to grant subordinate rights falling within the following rights:
	 	 	 	 	(a)	 	Distribute, lease, use, service and promote products or practice methods protected under The Patents;
	 	 	 	 	(b)	 	Distribute, lease, use, service and promote products which incorporate or use the Designated Technology; and
	 	 	 	 	(c)	 	Practice methods contained in the Designated Technology.
	 	 	14.6	 	Part 11 shall apply to define the geographical scope of the subordinate rights granted in this part.
	 	 	14.7	 	The grant by PDS FINANCIAL of any license or sublicense hereunder will be limited in time to no more than five (5) calendar years. If there are any provisions for renewal, then any renewal will be subject to denial by
DIGIDEAL should PDS FINANCIAL's rights become converted to non-exclusive or be terminated.
	 	 	14.8	 	Any licensee or sublicensee of PDS FINANCIAL which participates in a breach of this Agreement shall be subject to conversion or termination under the same terms as are applicable to PDS FINANCIAL.
	 	 	14.9	 	The grant of all or substantially all of the exclusive Patent Rights by PDS FINANCIAL to another party shall be considered an assignment and not a sublicense, and thus cannot be licensed, sublicensed or assigned without
DIGIDEAL's approval in writing.
	 	 	14.10	 	Any licensee or sublicensee granted rights under PDS FINANCIAL must be fully licensed with any and all gaming commissions having jurisdiction over the activities of the licensee or sublicensee as authorized under this
Agreement.
	
15.	
 	

GRANT OF TRADEMARK LICENSE
	 	 	DIGIDEAL hereby grants to PDS FINANCIAL an exclusive trademark license to use the Designated Trademarks, in connection with the sale, distribution, promotion or use of the Designated Products.
	
16.	
 	

GEOGRAPHICAL SCOPE OF TRADEMARK LICENSE
	 	 	The geographical scope of the trademark license of section 15 shall be the same as that provided for in section 11.
	
17.	
 	

LICENSE TO SUBLICENSE TRADEMARKS
	 	 	17.1	 	DIGIDEAL agrees that PDS FINANCIAL shall have the right to sublicense others to use one or more of the Designated Trademarks in one or more of the manners of use allowed to PDS FINANCIAL. All agreements to sublicense by PDS
FINANCIAL shall include terms requiring at least the requirements of sections 18-19 below.

Page 8 of 31

 

	 	 	17.2	 	If any Trademark Rights are transferred from DIGIDEAL to PDS FINANCIAL, such as in a manner analogous to the provisions of section 7, then the rights transferred shall be subject to reconveyance to DIGIDEAL under the
conditions of section 9.
	
18.	
 	

QUALITY CONTROL INVOLVING TRADEMARKS
	 	 	18.1	 	PDS FINANCIAL does not require any further approvals to use the Designated Trademarks in connection with the Designated Products.
	 	 	18.2	 	If PDS FINANCIAL wishes to use the Designated Trademarks with any products different from the Designated Products, then PDS FINANCIAL shall notify DIGIDEAL in writing prior to the initial distribution of any such products
which are to be marked with the Designated Trademarks. This requirement shall not apply to any new products which are either supplied by DIGIDEAL or if DIGIDEAL supplies all or substantially all of the components used by PDS FINANCIAL in assembling
and manufacturing the finished product. Any such notification shall explain the nature of the new products to be distributed and the planned date of first distribution. DIGIDEAL shall have at least four (4) weeks to review each such Trademarked
Product prior to the planned date of first distribution. Thereafter DIGIDEAL shall approve distribution in writing, or indicate the reasons for which approval is denied, or indicate the changes needed for approval. PDS FINANCIAL may not distribute
any new product bearing a Designated Trademark until written approval is received from DIGIDEAL. DIGIDEAL shall not make requirements for quality which are unreasonable in light of standard industry practices.
	 	 	18.3	 	PDS FINANCIAL agrees to permit DIGIDEAL or its representative to inspect facilities where any products bearing a Designated Trademark are being manufactured and packaged upon prior notice of three (3) business
days.
	 	 	18.4	 	DIGIDEAL shall have the right upon prior notice of three (3) business days to enter upon or have its representatives enter upon the premises of PDS FINANCIAL or any sublicensee to inspect the quality of goods being
sold, services being rendered, or goods or services which otherwise use the Designated Trademarks.
	 	 	18.5	 	In the event that the above-stated quality standards are not met or maintained throughout the term of this Agreement, DIGIDEAL has the right to require that PDS FINANCIAL comply with such quality standards within seven
(7) business days or cease production until compliance can be provided.
	 	 	18.6	 	The provisions of 18.2-18.5 immediately above shall apply fully to any and all sublicenses which PDS FINANCIAL may enter into with third parties.
	
19.	
 	

MARKING OF TRADEMARKS AND NO RE-BRANDING
	 	 	19.1	 	To the extent there will be any marking of Designated Trademarks by PDS FINANCIAL under this Agreement, PDS FINANCIAL agrees to mark all labels, advertising, packaging and other instances of use of the Designated Trademarks
with either the notification (TM) or with the symbol consisting of an R within a circle ® to indicate such trademarks are registered, if and when such trademarks do become registered by the United States Patent and Trademark Office. Usage of the
Designated Trademarks by PDS FINANCIAL or any sublicensee in the U.S. and/or any foreign country shall comply with all established practices of such countries for notifying or indicating that the Designated Trademarks are claimed as
exclusive.
	 	 	19.2	 	PDS FINANCIAL also agrees that no re-marking or re-branding of Designated Products will occur without written authorization from DIGIDEAL. Re-marking or re-branding of Designated Products means application of any additional
or changed trademark or other indication of origin upon the Designated Product other than trademarks applied under this Agreement or under another or modified agreement with DIGIDEAL or at DIGIDEAL'S instruction when the Designated Products are
originally manufactured, serviced, maintained, rebuilt, or repaired.

Page 9 of 31

 

	
20.	
 	

LICENSE OF COPYRIGHT WORKS
	 	 	20.1	 	DIGIDEAL hereby grants to PDS FINANCIAL an exclusive license to exercise any rights available under copyrights. The rights granted under this provision are for use of The Copyrights but only in connection with Designated
Products. The geographical scope of the license shall be the same as that provided for in section 11. The license granted under this part also includes the right to sublicense others to perform any acts PDS FINANCIAL has a right to perform with
respect to The Copyright Works.
	 	 	20.2	 	To the extent that any Copyrights are transferred from DIGIDEAL to PDS FINANCIAL under the provisions of section 7, then the license is superseded by the transfer until such time as any reconveyance may occur to
DIGIDEAL.
	
21.	
 	

PROTOTYPE
	 	 	21.1	 	DIGIDEAL agrees to transfer a currently developed prototype unit of the Designated Product along with associated software and other information needed for operation within thirty (30) days after the effective date of
this Agreement.
	 	 	21.2	 	The prototype shall be used for testing and as is otherwise appropriate to the project, but is not intended to be sold or placed for rentals.
	
22.	
 	

TRANSFER OF SUPPORT DOCUMENTATION
	 	 	22.1	 	DIGIDEAL shall disclose to PDS FINANCIAL at its chosen location, equipment and documentation, including without limitation, drawings, books, setup information, maintenance information, table mounting layouts, software,
hardware, source codes, and related materials needed by PDS FINANCIAL to manufacture, market, promote, lease, service, repair, and remanufacture the Designated Product.
	 	 	22.2	 	All Designated Technology in addition to the prototype covered in part 21, which is obligated to be transferred to PDS FINANCIAL will be transferred no later than thirty (30) days after the effective date of this
Agreement.
	
23.	
 	

COMMERCIAL PRODUCTION OF DESIGNATED PRODUCT
	 	 	23.1	 	PDS FINANCIAL shall have responsibility for production of Designated Product produced under this Agreement.
	 	 	23.2	 	Facilities and production equipment used by PDS FINANCIAL to produce Designated Product will be at the cost of PDS FINANCIAL and determined by PDS FINANCIAL. The facilities and production equipment used by PDS FINANCIAL
must produce Designated Product which is of acceptable quality to DIGIDEAL.
	 	 	23.3	 	PDS FINANCIAL will take components provided by DIGIDEAL or third party suppliers appointed or selected by DIGIDEAL and assemble, manufacture, program, test and otherwise prepare and package the Designated Product for
distribution to casinos or other customers.
	 	 	23.4	 	PDS FINANCIAL shall pay DIGIDEAL for all components billed by DIGIDEAL to PDS FINANCIAL within ten (10) days of receipt of the components by PDS FINANCIAL. Such shall be shipped f.o.b. Spokane, Washington.
	
24.	
 	

COMPONENTS USED IN PRODUCTION OF DESIGNATED PRODUCT
	 	 	24.1	 	Components used in the Designated Product shall be supplied by DIGIDEAL or as mutually agreed by DIGIDEAL and PDS FINANCIAL.
	 	 	24.2	 	If DIGIDEAL and PDS FINANCIAL agree that PDS FINANCIAL will supply components for the Designated Product, then a price will be agreed to and used in determining the costs of production for the Designated
Product.

Page 10 of 31

 

	 	 	24.3	 	If DIGIDEAL decides to have components to be supplied to PDS FINANCIAL by third party suppliers in lieu of from DIGIDEAL, then the quality of components supplied by such third party suppliers shall be acceptable to and
approved by PDS FINANCIAL. Any components supplied by third party suppliers shall be billed through DIGIDEAL or as otherwise authorized by DIGIDEAL. DIGIDEAL shall use best efforts to supply components in a timely manner.
	
25.	
 	

COSTS OF PRODUCTION FOR DESIGNATED PRODUCT
	 	 	25.1	 	PDS FINANCIAL will have actual and direct costs of production in assembling and manufacturing Designated Product. It is expected that the actual and direct costs of production will be in the range of *** Dollars
($***) to *** Dollars ($***), per Designated Product system. The actual and direct costs of production will be components supplied to PDS FINANCIAL and the agreed value of any components made by PDS
FINANCIAL.
	 	 	25.2	 	Also included in actual and direct costs of production are the direct costs associated with assembling, packaging and shipping the Designated Product. The actual and direct costs of production shall not include general
administration, space and facilities charges, installation and setup, and overhead associated with PDS FINANCIAL's performance under this Agreement.
	
26.	
 	

INSTALLATION AND SETUP OF DESIGNATED PRODUCT
	 	 	26.1	 	PDS FINANCIAL will also have installation and setup costs associated with work done either by PDS FINANCIAL or its sublicensee who is performing installation and setup of the Designated Products.
	 	 	26.2	 	Installation and setup costs are the actual costs of installation and setup as is charged to PDS FINANCIAL by a sublicensee, or actual time spent by employees of PDS FINANCIAL in performing these functions. Installation and
setup shall not include general and administrative expenses, space and facilities charges, or other overhead.
	
27.	
 	

INITIAL CHARGES
	 	 	27.1	 	The allowed costs of PDS FINANCIAL for actual and direct costs of production and for installation and setup will herein be termed the initial charges. The initial charges represent the marginal costs of production,
installation, and warranty for parts (for one year). They do not include administrative, sales, marketing, non-specific distribution costs, or servicing costs. Freight is not an initial charge and shall be paid by PDS FINANCIAL.
	
28.	
 	

REVENUE FROM RENTALS AND SALES
	 	 	28.1	 	PDS FINANCIAL or any authorized licensees or sublicensees shall then place the Designated Product with casinos or other users who shall pay rentals or purchase the units.
	 	 	28.2	 	The parties contemplate that rentals for the Designated Product will be in the range of *** Dollars ($*** U.S.) to *** Dollars ($*** U.S.) per month. If pricing is less than this
range, then it shall be agreed by both parties.
	 	 	28.3	 	Gross income from rentals or sales of the Designated Product shall be divided between PDS FINANCIAL and DIGIDEAL in the following manner:
	 	 	 	 	(a)	 	***
	 	 	 	 	(b)	 	After the payment of all the License Fees to DIGIDEAL as provided in section 13.1(d), then the following shall apply:
	 	 	 	 	 	 	(1)	 	At the time each unit of Designated Product is placed, then PDS FINANCIAL will pay DIGIDEAL a placement fee of $***.***

Page 11 of 31

 

	 	 	 	 	 	 	(2)	 	Gross revenue received from customers of the Designated Products shall be divided in the following manner with respect to each Designated Product placed:
	 	 	 	 	 	 	 	 	(A)	 	PDS FINANCIAL shall first recover a marketing and training allowance equal to*** Dollars ($***)*** per Designated Product placed;
	 	 	 	 	 	 	 	 	(B)	 	PDS FINANCIAL shall second recover initial charge payments equal to $*** per month per Designated Product; the initial charge payments made on each Designated Product shall continue at such monthly rate until
PDS FINANCIAL has recouped all initial charges for that particular Designated Product.
	 	 	 	 	 	 	 	 	(C)	 	The rentals, sales revenue or other revenue, or other rental, sales revenue received thereafter shall be ***.
	 	 	 	 	 	 	 	 	(D)	 	Any agreement between PDS FINANCIAL and any licensee or sublicensees shall not reduce the amount received by DIGIDEAL which will remain the same no matter what licensing or sublicensing PDS FINANCIAL may choose to employ
or not employ in furtherance of its obligations and responsibilities under this Agreement.
	 	 	28.4	 	The rental or sales revenue received in connection with Designated Product shall be measured as the true price paid by the user, e.g. casino or other user. This applies whether PDS FINANCIAL has appointed any licensee or
sublicensee who is between or in any manner receives revenue from the sale or rental of Designated Product.
	
29.	
 	

HANDLING OF REVENUE FROM DESIGNATED PRODUCTS
	 	 	29.1	 	PDS FINANCIAL shall provide any needed billing of customers for the rental and sales revenue, and receive payments constituting the revenue from rents, sales or other revenue or proceeds from Designated Product placed by
PDS FINANCIAL or its licensees.
	 	 	29.2	 	PDS FINANCIAL shall deposit DIGIDEAL's share of such rents in an escrow account within ten (10) days from the time PDS FINANCIAL receives any such payments.
	
30.	
 	

REPORTING OF REVENUE AND DESIGNATED PRODUCTS
	 	 	30.1	 	PDS FINANCIAL shall account in writing for all receipts of revenue and any refunds of revenue in a regular accounting report to DIGIDEAL which shall be done at least once per calendar month, or on a more frequent basis if
PDS FINANCIAL desires. The regular accounting reports shall list all Designated Product which have been manufactured by PDS FINANCIAL since the last regular accounting report. It will also show all Designated Product which has been placed for rental
and the amount of revenue billed and the revenues actually received on each Designated Product, or group of Designated Product if multiple systems are at one facility. Such regular accounting report shall also show all sales which have been made and
the sale prices agreed to, amounts billed and amounts actually received as revenue in connection with such sales. The regular accounting report will also show all Designated Product which has been returned, either as returned rentals or returned
sales. Such monthly accounting report shall identify the Designated Product by serial number and indicate the place of location, the organization or person who is in possession of the Designated Product and the agreed rental rate. Still further the
accounting will indicate the actual initial charge associated with each Designated Product listed and the amount of rent which has previously been recovered and the amount of any setoff which has been taken by PDS FINANCIAL in connection with
recovery of the initial charge.

Page 12 of 31

 

	 	 	30.2	 	DIGIDEAL's share of all rental and sales revenue received by PDS FINANCIAL shall be kept separate from regular operating expenses of PDS FINANCIAL until paid out to DIGIDEAL. Payments to DIGIDEAL shall be accompanied with a
regular accounting report which has been prepared accounting for all funds owed to DIGIDEAL and showing the payments made and the associated rents and sales receipts for which the payments to DIGIDEAL are being made.
	 	 	30.3	 	The regular accounting report and payments to DIGIDEAL and PDS FINANCIAL shall be made no later than the fifteenth (15th) day of the month immediately following the calendar month for which the accounting report covers the
transactions.
	 	 	30.4	 	Rent received by PDS FINANCIAL Will first be used as authorized herein to satisfy initial charges, until the full amount of the initial charge is recovered by PDS FINANCIAL. After PDS FINANCIAL has recovered the initial
charge, then one-half of all revenue received will be paid to DIGIDEAL and one-half shall be paid to PDS FINANCIAL. Revenue shall be measured at the customer level, e.g. casino or other user's amount of charge and shall not be diminished to cover the
fees associated with the activities of licensees or sublicensees.
	
31.	
 	

OTHER TYPES OF REVENUE
	 	 	31.1	 	Revenue from sales or rentals compensated for in a fashion other than monetary payment, franchise fees, sublicensing fees or other revenue or value received by PDS FINANCIAL in connection with distribution of Designated
Product shall be treated in the same manner as rent.
	 	 	31.2	 	If sales are made on an installment basis, then the installment payments are treated similar to rental payments. Payments on sales are considered made when received by PDS FINANCIAL and are handled in a similar fashion as
specified with regard to rent payments.
	
32.	
 	

OWNERSHIP OF DESIGNATED PRODUCT
	 	 	32.1	 	If Designated Product is rented, then the Designated Product shall be owned by PDS FINANCIAL.
	 	 	32.2	 	The disposition, retirement, remanufacture or other use of
	 	 	 	 	Designated Product returned from rental use shall be determined by PDS FINANCIAL.
	 	 	32.3	 	The disposition, retirement, remanufacture or other use of Designated Product returned from a purchase customer shall be determined by PDS FINANCIAL.
	 	 	32.4	 	Designated Product which is sold to customers shall be owned by the purchasing customer or a subsequent purchaser unless returned to PDS FINANCIAL.
	
33.	
 	

CURRENCY AND MONEY
	All monetary amounts specified in this Agreement are in United States Dollars.
	
34.	
 	

ACCOUNTING AUDITS
	 	 	34.1	 	DIGIDEAL shall have the right to inspect with three (3) business days prior notice, the records of PDS FINANCIAL and all licensees or sublicensees which are relevant to indicate the amount of rental revenue, sales
revenue, or other compensation which is owed to DIGIDEAL or otherwise to be paid in connection with this Agreement.
	 	 	34.2	 	DIGIDEAL shall also have the right to inspect the records of PDS FINANCIAL and all licensees or sublicensees which are relevant to the quality of Designated Product produced by or for PDS FINANCIAL and all licensees or
sublicensees.
	 	 	34.3	 	The rights to inspect indicated herein include the right to have an audit conducted by an appropriate auditing or accounting firm. If an audit indicates that PDS FINANCIAL has failed to pay amounts rightfully owed to
DIGIDEAL due to careless or inappropriate behavior or accounting, then the cost of the audit shall be fully paid by PDS FINANCIAL or the licensee or sublicensee who owes such amount.

Page 13 of 31

 

	 	 	34.4	 	The parties hereto agree that there may be a yearly audit conducted at DIGIDEAL's request for purposes of confirming the amounts owed DIGIDEAL in connection with this Agreement. The parties will share equally in bearing the
costs of such a yearly audit.
	
35.	
 	

SALES VERSUS RENTALS
	 	 	35.1	 	The parties hereto contemplate and it is their stated intent that most or all placement of Designated Products will occur on a rental basis.
	 	 	35.2	 	The parties hereto also recognize that in some jurisdictions there may be applicable regulations which prohibit or render impractical the rental of Designated Products, and therefore agree that PDS FINANCIAL can engage in
direct sale of Designated Products to casinos or other users.
	 	 	35.3	 	The decision whether to rent or sell Designated Product is determined by PDS FINANCIAL.
	
36.	
 	

SUBLICENSING
	 	 	36.1	 	Any licenses or sublicenses granted hereunder shall be limited to the scope of rights and privileges granted to PDS FINANCIAL and subject to the same terms, conditions and obligations.
	 	 	36.2	 	PDS FINANCIAL shall not enter into any agreement with any purported or actual licensee or sublicensee which fails to include clear and specific language indicating all limitations imposed upon PDS FINANCIAL under this
Agreement as it affects the rights to be exercised by any such licensee or sublicensee.
	 	 	36.3	 	If PDS FINANCIAL receives monetary or other remuneration or value in addition to or lieu of rental fees or sales revenue in connection with manufacture and distribution of Designated Products, then PDS FINANCIAL shall
report such revenue and it shall be treated in the same manner as rental revenue. This shall also apply to any franchise fees or other fees paid by any licensee or sublicensee for the right to perform under this Agreement.
	 	 	36.4	 	If PDS FINANCIAL delegates any responsibilities under this Agreement to a licensee or sublicensee, then the monetary effect of any such delegation will not diminish the revenue which DIGIDEAL would otherwise have received
if the delegation had not occurred and PDS FINANCIAL instead performed directly under this Agreement.
	 	 	36.5	 	Any licensee or sublicensee authorized by PDS FINANCIAL shall be obligated to make payments as specified herein the same as obligations of PDS FINANCIAL in connection with any revenue which is reportable under part 15,
16. All licenses or sublicenses shall include provisions so obligating the licensees or sublicensees. If any such licensee or sublicensee receives benefits under or equivalent to those granted to PDS FINANCIAL, and PDS FINANCIAL fails to pay, then
the licensee or sublicensee receiving such benefits shall pay the obligation. Any licensee or sublicensee shall also be obligated to report the information specified in part 15, 16 with respect to the activities of PDS FINANCIAL which have been
delegated to such licensee or sublicensee and the written agreements between PDS FINANCIAL and any such licensee or sublicensee shall so provide. Any such licensee or sublicensee shall only be obligated with respect to the obligations or benefits
received by that licensee or sublicensee and not obligations or benefits granted to other licensees or sublicensees or portions retained by PDS FINANCIAL.
	 	 	36.6	 	The obligation of PDS FINANCIAL to make payments pursuant to sections 16 and 25 shall not and cannot be delegated or become the responsibility of any licensee or sublicensee.
	
37.	
 	

CERTIFYING AND LICENSING OF DESIGNATED PRODUCTS

Page 14 of 31

 

	 	 	37.1	 	PDS FINANCIAL shall submit Designated Product developed hereunder to any applicable gaming commission or testing laboratory as needed to gain approval, licensing, or other certification as required or deemed desirable prior
to placement of the Designated Products for rental or sale, if such is required. Exemplary authorities in either: a) the state of Nevada, or b) the states of New Jersey and Mississippi, or Gaming Laboratories International (individually,
"Certifying Authority", collectively, "Certifying Authorities").
	 	 	37.2	 	PDS FINANCIAL shall incur all costs of licensing and certification of the Designated Product.
	 	 	37.3	 	PDS FINANCIAL and DIGIDEAL will cooperate as needed to overcome any requirements imposed by a gaming commission or other regulatory authority having jurisdiction over the manufacture or distribution of Designated
Products.
	 	 	37.4	 	Notwithstanding any other provision in this Agreement to the contrary, PDS FINANCIAL may terminate this Agreement at any time without further obligation or liability to DIGIDEAL if, in the judgment of PDS FINANCIAL's
Compliance Committee, the relationship with DIGIDEAL or DIGIDEAL's principals could subject PDS FINANCIAL to disciplinary action or cause PDS FINANCIAL to lose or become unable to obtain or reinstate any federal, state and/or foreign registration,
license or approval material to PDS FINANCIAL's business or the business of any PDS FINANCIAL subsidiary.
	 	 	37.5	 	It is the intention, understanding and belief of the parties that the Designated Product shall be considered as associated equipment by the applicable gaming authorities in the respective Designated Territories (as defined
by each Designated Territory's gaming act and/or regulations) where the Designated Product is submitted for regulatory approval. In the event that the applicable gaming authorities of a Designated Territory classify, categorize, declare or opine
(formerly or informally) that the Designated Product is a gaming device, gambling device, electronic gaming device or device of similar nature (as defined by the respective Designated Territory's gaming act and/or regulations) thereby imposing more
stringent restrictions and/or requirements on the approval of the Designated Product for that particular Designated Territory, the parties agree that this Agreement shall be amended, modified, replaced or terminated in order to accomplish the
objectives of the parties as contemplated herein. The parties agree to cooperate with one another and use their best efforts to restructure this Agreement in a manner that will be found acceptable by any applicable gaming authorities expressing
objections or concerns.
	
38.	
 	

LICENSING WITH INDIAN TRIBES
	 	 	38.1	 	PDS FINANCIAL will be responsible for employing or hiring a compliance director who will have responsibility for gaining or coordinating licensing for both PDS FINANCIAL and the Designated Product by the various tribal
gaming commissions or other applicable gaming authorities who are empowered to regulate manufacture, distribution, placement, servicing, repair and use of the Designated Product in the jurisdictions included within the Designated
Territories.
	 	 	38.2	 	PDS FINANCIAL shall incur all costs for licensing of PDS FINANCIAL as a manufacturer, distributor or other function provided for in this Agreement as required by the Certifying Authorities. PDS FINANCIAL will pay all fees
charged by the gaming authorities with regard to gaining licensing of PDS FINANCIAL or Designated Product. In the event it is determined that DIGIDEAL must be licensed in any or all jurisdictions, DIGIDEAL shall bear all such costs.
	 	 	38.3	 	PDS FINANCIAL shall keep DIGIDEAL reasonably apprised of official actions and significant communications to and from Certifying Authorities concerning licensing of PDS FINANCIAL or Designated Product.

Page 15 of 31

 

	 	 	38.4	 	If DIGIDEAL undertakes any efforts in the nature of submission or seeking approval from Gaming Laboratories, Inc. with regard to use, manufacture or sale of the Designated Product within the United States of America,
then to the extent such effort by DIGIDEAL can be used to facilitate PDS FINANCIAL's activities under this Agreement, DIGIDEAL agrees to make such information available to PDS FINANCIAL for aiding of the efforts to obtain approvals.
	
39.	
 	

INSTALLATION, SERVICING AND MAINTENANCE OF DESIGNATED PRODUCT
	 	 	39.1	 	Designated Product which has been placed for rent or sold will be installed by PDS FINANCIAL or a licensee or sublicensee appointed by PDS FINANCIAL.
	 	 	39.2	 	PDS FINANCIAL will also perform servicing, maintenance and repair of Designated Product to maintain the Designated Product in normal and satisfactory operation. PDS FINANCIAL also has the option of training personnel of a
casino or other user of the Designated Products to provide servicing and maintenance thereof.
	 	 	39.3	 	PDS FINANCIAL agrees to maintain an adequate number of repair facilities to adequately service the Designated Product, and in any case at least one repair facility for servicing and maintenance of Designated
Product.
	 	 	39.4	 	PDS FINANCIAL also agrees to maintain an inventory of spare parts as needed to fulfill the intended maintenance to be performed by PDS FINANCIAL.
	
40.	
 	

TECHNICAL SUPPORT AND REIMBURSEMENT FOR EXPENSES
	 	 	40.1	 	Digideal will make available to PDS FINANCIAL technical support at PDS FINANCIAL's request.
	 	 	40.2	 	PDS FINANCIAL will bear all costs for any such services, including travel and other expenses incurred in providing such services.
	
41.	
 	

CONFIDENTIALITY OF DISCLOSURE AND DESIGNATED TECHNOLOGY
	 	 	41.1	 	PDS FINANCIAL agrees that all disclosure from DIGIDEAL to PDS FINANCIAL under this Agreement is done in confidence except for the information contained in The Patents which issue or are published, effective upon the date of
issuance or date of publication. All materials embodying Designated Technology shall be maintained in confidence as a trade secret and not disclosed except as expressly allowed in this Agreement. Incidental writings and information included in the
materials describing and disclosing Designated Technology are not bound to secrecy and nondisclosure if such writings and information are generally known in the trade or if such writings or information later become generally known in the trade or to
the public through no fault of PDS FINANCIAL, and such writings and information do not contain confidential information concerning the Designated Technology.
	 	 	41.2	 	Both parties agree that the other party can disclose confidential information contained in the Designated Technology to: gaming regulatory agencies needing information in connection with obtaining and complying with
regulations under their jurisdiction, licensees, sublicensees, investors, financial institutions who are considering loans or investments in the other party. PDS FINANCIAL grants DIGIDEAL the right to provide confidential information specifically
relating to the financial terms and conditions of this Agreement to its insiders, investors and financial institutions. The third parties who are to receive such information will agree to receive such information in confidence, to maintain the
secrecy thereof, and to not disclose the content of such information, under at least the same or similar conditions as described above with respect to PDS FINANCIAL.
	 	 	41.3	 	Both parties agree to mark all materials which include confidential information relating to the Designated Technology and that said materials shall be marked "Proprietary", "Confidential", "Secret", or with words of similar
meaning.
	
42.	
 	

RESERVED

Page 16 of 31

 

	
43.	
 	

RESERVED
	
44.	
 	

PATENT APPLICATIONS
	 	 	44.1	 	Rights to File—DIGIDEAL shall have the right to have applications for patents, utility models, design patents and similar forms of legal protection (hereinafter collectively referred to as
"patents") filed on all patentable inventions or otherwise protectible interests contained within the Designated Technology. This applies equally to original applications and any foreign or domestic derivative applications directed to Designated
Technology.

Page 17 of 31

 

	 	 	44.2	 	Prosecution—PDS FINANCIAL agrees that DIGIDEAL shall have responsibility for preparing, filing and prosecuting any such patent applications, and that all such work shall be done at DIGIDEAL's
expense.
	
45.	
 	

REGISTRATION OF LICENSE
	 	 	If under the law of any jurisdiction within the Designated Territory, the execution or registration of any registered user or similar agreement in respect of any of the Patents or Designated Technology is required or
permitted in order for PDS FINANCIAL to obtain the full benefit of this Agreement, PDS FINANCIAL may, at its own cost and expense, register this Agreement or execute or register the appropriate registered user or similar agreement in order that PDS
FINANCIAL shall obtain such full benefits. If the registration of this Agreement is not required, but instead optional or of beneficially effect, then no registration shall occur without the written agreement of DIGIDEAL.
	
46.	
 	

MINIMUM PERFORMANCE BY PDS FINANCIAL
	 	 	46.1	 	PDS FINANCIAL shall under any and all circumstances achieve commercial distribution of Designated Product by fifteen (15) months after the effective date of this Agreement. If commercial distribution has not occurred
by within such period, then this amended Agreement shall automatically terminate upon notice but without any opportunity to cure and without any period to cure this deficiency. Automatic termination under this provision shall otherwise be subject to
the termination provisions of this Agreement.
	 	 	46.2	 	PDS FINANCIAL shall produce results in effecting rental, sale or other revenue associated with Designated Product which gives rise to payment of revenue to DIGIDEAL according to the schedule below. Failure by PDS FINANCIAL
to achieve revenue for the specified number of Designated Products shall be deemed a material breach of the contract and shall justify DIGIDEAL in termination under part 62.
	 	 	46.3	 	PDS FINANCIAL shall have Designated Product placed and generating rental or sales revenue during the specified periods, for at least the following number of systems of the Designated Product. A Designated Product system
will count in meeting the following requirements if the Designated Product has either been sold during the minimum performance accounting period or if the system is in place generating revenue at the end of the minimum performance accounting
period.
	 	 	 	 	a)	 	For the period calendar year 2001, at least 100 systems.
	 	 	 	 	b)	 	For the period calendar year 2002, at least 250 systems.
	 	 	 	 	c)	 	For the period calendar year 2003, at least 450 systems.
	 	 	 	 	d)	 	For the period calendar year 2004, at least 650 systems.
	 	 	 	 	e)	 	For the period calendar year 2005, at least 750 systems.
	 	 	46.4	 	Should PDS FINANCIAL fail to rent and sell the minimum units described above, then DIGIDEAL shall, at its sole discretion, have the option to either a) terminate this Agreement, or b) convert PDS FINANCIAL's
rights hereunder so that all rights are non-exclusive.
	
47.	
 	

IMPROVEMENTS AND DEVELOPMENTS IN DESIGNATED TECHNOLOGY
	 	 	47.1	 	Improvements by DIGIDEAL—Improvements, enhancements and additional inventions relating to the Designated Technology by DIGIDEAL (hereinafter "DIGIDEAL Improvements") shall not be considered
within the scope of Designated Technology unless such falls within the scope of The Patents specifically enumerated in part 3.1, 3.2, 3.3, 3.4 and 3.5. PDS FINANCIAL shall have the same rights and obligations with respect to such DIGIDEAL
Improvements, starting with the date of actual disclosure to PDS FINANCIAL, as applies to Designated Technology in general under this Agreement. Patent applications on any DIGIDEAL Improvements shall be handled as indicated in
part 44.

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	 	 	47.2	 	Improvements by PDS FINANCIAL—Improvements, enhancements and additional inventions relating to the Designated Technology by employees of PDS FINANCIAL (hereinafter "PDS FINANCIAL
Improvements"), shall be disclosed to DIGIDEAL within three (3) months of discovery. All rights of any nature or type in any improvements shall initially revert to PDS FINANCIAL. If such improvements fall within the scope of The Patents then
DIGIDEAL shall have an option to repurchase under the same terms and conditions as provided for in section 9. PDS FINANCIAL shall be responsible for filing any patent applications on improvements made by PDS FINANCIAL or its licensees or
sublicensees. If DIGIDEAL exercises its option to repurchase in connection with any improvements made by PDS FINANCIAL, or its licensees or sublicensees, then PDS FINANCIAL employees shall provide DIGIDEAL reasonable assistance and cooperation as is
necessary to allow DIGIDEAL to file or further pursue any patent applications on PDS FINANCIAL Improvements.
	 	 	47.3	 	Improvements by Licensee or Sublicensees—Improvements, enhancements and additional inventions relating to the Designated Technology by employees of any licensee or sublicensee (hereinafter
"Licensee or Sublicensee Improvements"), shall be governed by the sublicense under which the licensee or sublicensee is licensed. However, as a minimum, all licensees or sublicensees must agree to disclose all such Licensee or Sublicensee
Improvements to PDS FINANCIAL within one (1) month of discovery. PDS FINANCIAL agrees to disclose any such Licensee or Sublicensee Improvements to DIGIDEAL within one (1) month of disclosure by a licensee or sublicensee to PDS FINANCIAL.
Any patent applications or patents on Licensee or Sublicensee Improvements shall be handled in the same manner as if they are improvements by PDS FINANCIAL.
	
48.	
 	

EMPLOYEE INVENTION AGREEMENTS
	 	 	48.1	 	PDS FINANCIAL agrees that all PDS FINANCIAL employees, agents and consultants given access to the Designated Technology shall sign a confidentiality agreement and invention assignment agreement whereby any improvements,
enhancements and new inventions relating to the Designated Technology are required to be disclosed and assigned to DIGIDEAL, or to PDS FINANCIAL and PDS FINANCIAL shall reassign such to DIGIDEAL if required by the provisions of
part 47.
	
49.	
 	

MARKING OF PRODUCTS EMBODYING PATENT RIGHTS AND COPYRIGHTS
	 	 	49.1	 	PDS FINANCIAL and DIGIDEAL agree that all products and equipment sold, leased or distributed hereunder which is within the scope of any claim issued in a U.S. or foreign patent shall be marked with one or more patent
numbers or other notices in a manner consistent with and as required by the laws of the jurisdiction in which the products and equipment are to be sold or otherwise used or distributed. Failure to so mark all patented products and equipment will
subject PDS FINANCIAL to liability to DIGIDEAL for losses associated with such failure to mark.
	 	 	49.2	 	PDS FINANCIAL and DIGIDEAL also agree to mark all reproductions, copies and derivative works based on The Copyright Works with notice of the claim to copyrights as required to fully protect The Copyright Works under the
laws of the jurisdiction in which the reproductions, copies or derivative works are to be sold or distributed.
	 	 	49.3	 	The provisions of this part shall apply to licensee or sublicensees and all sublicenses shall so provide.
	 	 	49.4	 	PDS FINANCIAL and DIGIDEAL agree to indicate DIGIDEAL's invention of Designated Products and trademark rights in promotional and advertising materials, and on the Designated Products.

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50.	
 	

ASSIGNMENT AND OWNERSHIP
	 	 	50.1	 	Because of the nature of rights and obligations granted hereunder, neither DIGIDEAL nor PDS FINANCIAL can assign any rights or obligations under this Agreement unless the proposing assignor has received written
authorization from the other party.
	 	 	50.2	 	The limitations on assignment of right or obligations provided for in the previous paragraph shall not prevent either PDS FINANCIAL or DIGIDEAL from assigning such rights and obligations as part of the sale of all or
substantially all of these parties respective businesses. The possible assignment of rights provided for in this paragraph is only exercisable if the assigning party's obligations will not be materially derogated by the planned assignment. The
assigning party must notify the other non-assigning party at least two (2) months before the planned assignment will be effective. The non-assigning party can object to a proposed assignment within one month after being actually notified. Any
objection must be submitted in a written objection communicated to the assigning party in a manner similar to notices of breach. The proposed assignment will then be submitted to binding arbitration in accordance with the provisions of
part 78.
	
51.	
 	

WARRANTIES OF DIGIDEAL
	 	 	51.1	 	DIGIDEAL makes only the warranties expressly made below.
	 	 	 	 	(a)	 	DIGIDEAL warrants that neither DIGIDEAL nor any of its corporate officers has information indicating that the subject matter of The Patents infringes any U.S. or foreign patents.
	 	 	 	 	(b)	 	DIGIDEAL makes no other warranties.
	
52.	
 	

DISCLAIMER OF WARRANTIES By DIGIDEAL
	 	 	52.1	 	DIGIDEAL hereby disclaims all warranties not expressly made herein and further specifically disclaims as set forth below.
	 	 	 	 	(a)	 	No warranty or representation is made that practice of the Designated Technology by PDS FINANCIAL or its licensee or sublicensees as allowed under this Agreement will not infringe upon patent or trademark rights of a third
party now unknown to DIGIDEAL and/or PDS FINANCIAL.
	 	 	 	 	(b)	 	No warranty or representation is made that patent protection will necessarily be obtained on the Designated Technology.
	 	 	 	 	(c)	 	No warranty is made to indemnify PDS FINANCIAL for any claims arising from DIGIDEAL's activities under this Agreement.
	
53.	
 	

WARRANTIES OF PDS FINANCIAL
	 	 	53.1	 	PDS FINANCIAL makes only the warranties expressly made below.
	 	 	 	 	(a)	 	PDS FINANCIAL warrants that neither PDS FINANCIAL nor any of its corporate officers has information indicating that the subject matter of The Patents infringes any U.S. or foreign patents.
	 	 	 	 	(b)	 	PDS FINANCIAL warrants that it will attempt to obtain licensing by state gaming authorities enabling PDS FINANCIAL to perform rental or sales of Designated Product in at least the states of Nevada, Mississippi, and New
Jersey by the end of calendar year 2002.
	 	 	 	 	(c)	 	PDS FINANCIAL makes no other warranties.
	
54.	
 	

DISCLAIMER OF WARRANTIES BY PDS FINANCIAL
	 	 	54.1	 	PDS FINANCIAL hereby disclaims all warranties not expressly made herein and further specifically disclaims as set forth below.
	 	 	 	 	(a)	 	No warranty or representation is made that practice of the Designated Technology by PDS FINANCIAL or its licensee or sublicensees as allowed under this Agreement will not infringe upon patent or trademark rights of a third
party now unknown to DIGIDEAL and/or PDS FINANCIAL.

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	 	 	 	 	(b)	 	No warranty or representation will be made that patent protection will necessarily be obtained on the Designated Technology.
	 	 	 	 	(c)	 	No warranty is made to indemnify DIGIDEAL for any claims arising from PDS FINANCIAL's activities under this Agreement.
	
55.	
 	

ENFORCEMENT OF PATENT AND OTHER EXCLUSIVE RIGHTS AGAINST INFRINGERS
	 	 	55.1	 	PDS FINANCIAL shall be primarily responsible for enforcing any patent or other exclusive rights in the Designated Technology against infringers thereof. PDS FINANCIAL shall not be obligated to institute legal proceedings
for infringement.
	 	 	55.2	 	DIGIDEAL is empowered to file legal actions or otherwise enforce any of the exclusive rights contained in The Designated Technology if such rights are owned by DIGIDEAL, or if PDS FINANCIAL has decided against taking
enforcement action against infringers and the exclusive rights are owned by PDS FINANCIAL. DIGIDEAL shall not be obligated to institute legal proceedings for infringement.
	 	 	55.3	 	If DIGIDEAL and PDS FINANCIAL agree to cooperatively institute legal action against some third party for infringement of the Designated Technology, then each shall share equally in the costs of litigation. Any recovery
under such legal actions shall be divided between PDS FINANCIAL and DIGIDEAL between the parties based upon their relative payment of the total litigation costs.
	 	 	55.4	 	If either DIGIDEAL or PDS FINANCIAL do not institute legal action for infringement, then the other may at its election sue for infringement or other cause, except no such action will be taken if the owner of the patent
objects to the institution of legal action concerning a patent it owns. Any recovery under such legal actions shall be solely the property of the party pursuing the lawsuit.
	
56.	
 	

NOTIFICATION OF INFRINGEMENT
	 	 	56.1	 	PDS FINANCIAL and DIGIDEAL both agree to notify the other within ten (10) days of becoming aware of any infringement of Designated Technology by third parties.
	
57.	
 	

CLAIMS FROM THIRD PARTIES
	 	 	57.1	 	Notwithstanding the provision of part 57 of the Original Agreement, the parties hereto hereby modify such provisions and agree that if any third party takes legal action or otherwise makes or asserts a claim against
either of the parties to this agreement, and such action, assertion or claim is based upon infringement of any patent, trademark or copyright associated with the Designated Product, Designated Trademarks, The Copyright Works, or other proprietary
right licensed or conveyed under the terms of the Original Agreement, then the following provisions shall apply. For convenience, any such action, assertion or claim shall be referred to below as a "third party infringement claim".
	 	 	57.2	 	The parties agree to cooperate in defending, settling or otherwise resolving any third party infringement claim.
	 	 	57.3	 	All costs of defending against any third party infringement claim shall be equally divided between the parties.
	 	 	57.4	 	Costs of defending against any third party infringement claim shall include monetary outlays for court costs, lawyers fees, investigation costs, costs of depositions, copy costs incurred in connection with a lawsuit, and
other monetary outlay costs incurred because of actions taken in connection with the third party infringement claim.

Page 21 of 31

 

	 	 	57.5	 	Costs of defending against any third party infringement claim shall not include labor or employment costs and associated taxes for any employee of either party unless there is specific further agreement that such employee
costs shall be shared under the terms of this modification and the Original Agreement. Also excluded are costs of consultants normally employed by either party in connection with the party's regular business, unless agreed by the parties or unless
the consultant's fees are specifically charged in connection with services provided in defending against the third party infringement claim. Management consultants shall be considered the same as employees for purposes of determining whether their
service fees are considered costs of defending against any third party claims.
	 	 	57.6	 	Any recovery to either party resulting from any third party infringement claim, such as a favorable ruling upon a counterclaim, shall first be used to pay unpaid costs incurred by both parties in connection with the third
party infringement claim. Thereafter the parties shall be reimbursed to the extent that the costs of defending have not been borne equally. Thereafter the recovery shall be divided equally or in a manner sufficient to provide equal treatment of the
parties with respect to costs and recovery in connection with the third party infringement claim.
	 	 	57.7	 	The provisions of this modification agreement shall not apply to counterclaims filed by either party which are not within the definition or subject matter of a third party infringement claim as defined hereinabove, unless
there is agreement in writing between the parties that such a counterclaim is governed by the provisions of this modification.
	 	 	57.8	 	If any provision of the Original Agreement is inconsistent with the terms of this modification, then the provision contained herein shall govern.
	 	 	57.9	 	Each party shall give the other prompt notice in writing of any claim of infringement made known to it or the threat of any such claim.
	
58.	
 	

COVENANTS NOT TO COMPETE
	 	 	58.1	 	PDS FINANCIAL recognizes that DIGIDEAL has created the Designated Technology and agrees that proprietary information is being conveyed to PDS FINANCIAL in connection with the ongoing business relationship evidenced by this
Agreement. If PDS FINANCIAL's rights under this Agreement cease, then PDS FINANCIAL agrees to not compete with DIGIDEAL or DIGIDEAL's authorized distributor of the Designated Technology with regard to sale or rental of the Designated Product. Such
agreement not to compete applies for a period of two (2) years from the discontinuation of PDS FINANCIAL's rights under this Agreement or one (1) year after receipt by DIGIDEAL of all payments owed by PDS FINANCIAL under this Agreement,
whichever is later. This applies whether such termination is by action of DIGIDEAL or voluntary action of PDS FINANCIAL. The covenant to not compete applies worldwide.
	 	 	58.2	 	PDS FINANCIAL further agrees to discontinue any use of any confidential information of DIGIDEAL's for a period of at least five (5) years from the discontinuation of PDS FINANCIAL's rights under this Agreement. Any use
of DIGIDEAL's proprietary information shall only occur thereafter if such proprietary information has entered into the public domain. If such information is not in the public domain then PDS FINANCIAL shall make no use of DIGIDEAL's confidential
information whatsoever.

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	 	 	58.3	 	DIGIDEAL has employees, and is collaborating with outside technical consultants, both of which will be working to transfer technology to PDS FINANCIAL in connection with development of the Designated Product. In continued
development and commercialization of the Designated Product, PDS FINANCIAL agrees not to employ any existing employee, or any employee of DIGIDEAL hired hereafter, or consultant of DIGIDEAL without first receiving authorization from DIGIDEAL. This
limitation shall last for a period of three (3) years after- a) the employee or consultant of DIGIDEAL leaves service of DIGIDEAL, or b) leaves permissive service of PDS FINANCIAL if such service was authorized by DIGIDEAL in
furtherance of the Designated Product.
	 	 	58.4	 	DIGIDEAL is developing other gaming products in addition to the Designated Products. PDS FINANCIAL agrees not to produce products which are Competitive with other DIGIDEAL products for a period of two (2) years after
the termination of PDS FINANCIAL's rights under this Agreement. Products which are competitive with other DIGIDEAL products shall include products produced by DIGIDEAL or a third party authorized by DIGIDEAL, if such products fall within the
following definition:
	 	 	 	 	Gaming systems which utilize automated electronically controlled visual displays which during the play of games include display or cards or symbols which are visually displayed by said visual displays, said gaming systems
being adapted for play by at least one dealer and at least one player who are physically present in a single room to play a game using such cards or symbols.
	
59.	
 	

COMPLIANCE WITH EXPORT OF TECHNOLOGY AND OTHER LAWS
	 	 	PDS FINANCIAL agrees to comply with all U.S. and foreign government statutes governing import and export of technological information, taxes and other applicable laws. Since the technological information licensed hereunder
is initially subject to the laws of the United States, no disclosure to individuals or organizations which constitutes a violation of the export of technology laws or other U.S. or state statute of similar nature or effect, shall occur by PDS
FINANCIAL. Any further improvements or inventions which become part of the Designated Technology shall similarly be controlled by U.S. law or the law of any foreign nation in which such inventions or improvements are created, or as otherwise made
applicable under such U.S. or foreign law.
	
60.	
 	

CONVERSION TO NON-EXCLUSIVE
	 	 	60.1	 	If during the period of exclusivity and prior to transfer of rights under part 7, PDS FINANCIAL fails to comply with the terms of this Agreement, and such failure or failures are material breaches, then DIGIDEAL may
convert one or more of the exclusive rights granted to PDS FINANCIAL hereunder into non-exclusive rights. Conversion shall also be possible if PDS FINANCIAL becomes insolvent, bankrupt, fails to perform, or is for other reason unable to effectively
conduct business.
	 	 	60.2	 	Such conversion shall be effected by DIGIDEAL sending a certified letter, return receipt requested, containing a notice of default indicating the failure or breach of this Agreement upon which conversion is to be based. PDS
FINANCIAL shall then have a thirty day period to prepare a plan which outlines how the failure or breach will be rectified. DIGIDEAL will then indicate whether DIGIDEAL believes the plan will rectify the failure or breach. PDS FINANCIAL will have a
cure period of three (3) months after DIGIDEAL states its position concerning the plan during which to rectify the failure or breach. The three month cure period will start on the date that PDS FINANCIAL receives the position of DIGIDEAL in
writing. If PDS FINANCIAL fails to cure within the cure period, then conversion shall occur upon DIGIDEAL's mailing of a notice of conversion after the expiration of the cure period.

Page 23 of 31

 

	
61.	
 	

EFFECT OF CONVERSION
	 	 	61.1	 	Conversion shall not diminish PDS FINANCIAL's obligation to make payments hereunder.
	 	 	61.2	 	Conversion does not diminish DIGIDEAL's obligations hereunder except that any exclusive rights previously held by PDS FINANCIAL are no longer exclusive.
	 	 	61.3	 	Conversion of this Agreement from exclusive to non-exclusive rights shall not change the status of licenses or sublicenses entered into by PDS FINANCIAL in accordance with this Agreement, unless the licenses or sublicenses
are exclusive, in which case they shall become non-exclusive and limited to the same extent as the licenses held after conversion by PDS FINANCIAL.
	 	 	61.4	 	Upon conversion PDS FINANCIAL is also limited and can no longer negotiate new licenses or sublicenses under this Agreement unless authorized by DIGIDEAL on a case-by-case basis and under terms agreeable to
DIGIDEAL.
	 	 	61.5	 	The option to repurchase rights under section 9 shall become immediately exercisable upon conversion.
	
62.	
 	

TERMINATION BY DIGIDEAL
	 	 	62.1	 	If PDS FINANCIAL fails to comply with the terms of this Agreement, and such failure or failures are significant and material breaches, then DIGIDEAL may terminate this Agreement and the rights granted to PDS FINANCIAL
hereunder. Termination shall also be possible if PDS FINANCIAL becomes insolvent, bankrupt, fails to perform, or is for other reason unable to conduct business. Further, termination shall be possible if any key employee of PDS FINANCIAL is convicted
of a crime involving moral turpitude.
	 	 	62.2	 	Without limitation being implied, it is agreed that the significant provisions of the following aspects, sections or parts of this Agreement are sufficient to warrant termination: all requirements to make payments, 9, 37,
38, 39.1, 39.2, 41, 42, 34, 47, 50.
	 	 	62.3	 	Termination shall be effected by DIGIDEAL sending a certified letter, return receipt requested, containing a notice of default indicating the failure or breach of this Agreement upon which termination is to be based. PDS
FINANCIAL shall then have a thirty day period to prepare a plan which outlines how the failure or breach will be rectified. DIGIDEAL Will then indicate whether DIGIDEAL believes the plan will rectify the failure or breach. PDS FINANCIAL will have a
cure period of three (3) months after DIGIDEAL states its position concerning the plan during which to rectify the failure or breach. The three month cure period will start on the date that PDS FINANCIAL receives the position of DIGIDEAL in
writing. If PDS FINANCIAL fails to cure within the cure period, then termination shall occur upon DIGIDEAL's mailing of a notice of termination after the expiration of the cure period.
	
63.	
 	

EFFECT OF TERMINATION BY DIGIDEAL
	 	 	63.1	 	Upon termination, all rights of PDS FINANCIAL except for those specifically indicated as continuing, shall terminate.
	 	 	63.2	 	Termination shall not diminish PDS FINANCIAL's obligation to make payments hereunder.
	 	 	63.3	 	Designated Product which is in the process of being sold shall proceed to be sold and installed within a period of thirty (30) days. Sales requiring delivery at alater time than this period shall only be pursued if an
agreement has already been entered into, or upon specific authorization from DIGIDEAL.
	 	 	63.4	 	Upon termination, PDS FINANCIAL shall no longer place any additional Designated Product on rental, except with the specific authorization of DIGIDEAL and under terms agreeable to DIGIDEAL.

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	 	 	63.5	 	PDS FINANCIAL shall continue to treat revenue in the same manner after termination as prior to termination, except that PDS FINANCIAL shall have no right to any revenue after PDS FINANCIAL fails to provide general customer
support, maintenance or repair services.
	 	 	63.6	 	PDS FINANCIAL shall, if otherwise entitled, receive revenue under this Agreement until the sooner of the following events:
	 	 	 	 	(a)	 	one (1) year after the date of termination;
	 	 	 	 	(b)	 	until the Designated Product is replaced;
	 	 	 	 	(c)	 	until the contract under which the Designated Product is placed expires; or
	 	 	 	 	(d)	 	PDS FINANCIAL Stops performing services as required under this Agreement.
	 	 	63.7	 	The option to repurchase rights under section 9 shall become immediately exercisable upon termination and all rights under The Patents shall be reconveyed or otherwise revert to DIGIDEAL.
	 	 	63.8	 	Upon termination, all payments then owed shall become immediately due and payable.
	 	 	63.9	 	Upon termination, PDS FINANCIAL may continue to use previously purchased repair parts and obtain additional repair parts as needed to continue any servicing of customers. However, no refund or setoff for spare parts
purchased from DIGIDEAL will be made more than one (1) year after termination.
	 	 	63.10	 	After termination of this Agreement, all rights granted herein shall revert to DIGIDEAL who may assign or license others to use the Designated Technology, Designated Trademarks, or The Copyrights.
	 	 	63.11	 	Upon termination, PDS FINANCIAL agrees to stop all further use of the Designated Technology and turn over to DIGIDEAL all materials which relate to the Designated Technology. PDS FINANCIAL shall be responsible for any
damages caused by the unauthorized use of such materials or reproduction materials which are not turned over. Any continued use by PDS FINANCIAL of materials concerning Designated Technology shall be limited to servicing and repair of existing
rentals and be specifically authorized by DIGIDEAL.
	 	 	63.12	 	All licenses and sublicenses entered into by PDS FINANCIAL will be assigned or otherwise transferred to DIGIDEAL if PDS FINANCIAL's rights and obligations under this Agreement are terminated, and DIGIDEAL shall accede to
all of PDS FINANCIAL's rights in and under the applicable licenses or sublicenses.
	 	 	63.13	 	Upon termination, Designated Technology Rights, Designated Trademark Rights or The Copyrights shall not be licensed or sublicensed without the prior written approval of DIGIDEAL.
	 	 	63.14	 	Termination does not diminish DIGIDEAL's obligations hereunder for those obligations which related to any continued activity of PDS FINANCIAL and are possible of being maintained after termination. Specific limitations and
time periods contained in other parts of this Agreement will apply to limit obligations after termination.
	
64.	
 	

TERMINATION BY PDS FINANCIAL
	 	 	64.1	 	PDS FINANCIAL shall have the right to terminate this Agreement for significant, material breaches by DIGIDEAL.
	 	 	64.2	 	Termination shall be effected in a manner the same as or consistent with the procedure set out in part 62.
	 	 	64.3	 	The cure period applicable shall be thirty (30) days under all parts relating to termination by PDS FINANCIAL.
	
65.	
 	

EFFECT OF TERMINATION BY PDS FINANCIAL
	 	 	65.1	 	Termination by PDS FINANCIAL shall result in the same effects of termination as provided for in section 63.

Page 25 of 31

 

	 	 	65.2	 	Following termination by PDS FINANCIAL, DIGIDEAL shall have no obligation to repay to PDS FINANCIAL any advances or payments paid by PDS FINANCIAL under this Agreement.
	
66.	
 	

MODIFICATION OF AGREEMENT
	 	 	No modification of this Agreement shall be valid or binding unless the modification is executed in writing signed by all parties to this Agreement.
	
67.	
 	

NO WAIVER
	 	 	No waiver by either party of a breach or a default hereunder shall be deemed a waiver by such party of a subsequent breach or default of a like or similar nature.
	
68.	
 	

SEVERABILITY
	 	 	In the event that any term or provision of this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other
term or provision of this Agreement and shall be interpreted and construed as if such term or provision, to the extent the same shall have been held to be invalid, illegal, or unenforceable, had never been contained herein.
	
69.	
 	

FORCE MAJEURE
	 	 	If during the performance of obligations under this Agreement, either party is prevented from performance on the basis of labor strike, natural disaster, riot, war, or other causal force which was not reasonably foreseeable
or reasonably preventable, then failure by that party to meet its obligation to perform shall be excused until such time as the cause preventing performance is removed and the party can thereafter reasonably perform.
	
70.	
 	

APPLICABLE LAW
	 	 	This Agreement shall be construed and governed in accordance with the laws of the State of Nevada, United States of America.
	
71.	
 	

JURISDICTION AND VENUE
	 	 	The parties hereto agree that jurisdiction in Nevada and venue in Clark County, Nevada shall be proper, and as otherwise provided for under law.
	
72.	
 	

NOTICES
	 	 	All notices required to be sent to either party shall be in writing and sent by registered or certified mail, postage prepaid, return receipt requested, or by telex or telegram, charges prepaid to the parties at the
addresses given hereinabove, or such future addresses as the parties shall designate in writing. Notices can also be communicated by fax but are not considered effective unless the party being notified confirms receipt of the fax in writing or by a
return fax indicating receipt of the notice previously sent by fax, or if the sender's confirmation report indicates successful transmission to the other party, unless the receiving party can prove the fax was not received. Payments can be sent by
first class mail.
	
73.	
 	

RELATIONSHIP OF THE PARTIES
	 	 	This Agreement does not create a partnership or joint venture between the parties and neither party shall have any power to obligate or bind the other in any manner whatsoever, except as specifically expressed in this
Agreement.
	
74.	
 	

ATTORNEY'S FEES
	 	 	If either of the parties to this Agreement institute arbitration or legal proceedings to enforce the terms of this Agreement, the parties agree that the unsuccessful party to such arbitration or legal proceedings shall pay
the reasonable attorney's fees and legal costs of both parties, as the same may be approved by the arbitrator or court having jurisdiction over such proceedings.

Page 26 of 31

 

	
75.	
 	

INTEGRATION, ENTIRE AGREEMENT
	 	 	75.1 This instrument constitutes the entire agreement between the parties. Neither party shall be bound by any terms, conditions, understandings, warranties, statements or representations, oral or
written, not contained in this Agreement. Both parties hereby acknowledge that the execution of this Agreement was not induced or motivated by any promise or representation made by any other party, other than the promises and representations
expressly set forth in this Agreement. All previous negotiations, statements, and preliminary instruments by the parties or their representatives are merged into this Agreement, except as expressly provided herein.
	 	 	75.2 This Agreement is hereby incorporated into the "Recitals" section of the Confidential Software License Agreement by and between the parties hereto, with an effective date of June 16,
1999.
	
76.	
 	

COUNTERPART ORIGINAL AGREEMENT
	 	 	This Agreement shall be executed in multiple original counterparts with each party retaining one copy thereof.
	
77.	
 	

EFFECTIVE DATE OF AGREEMENT AND TERM OF AGREEMENT
	 	 	77.1	 	The effective date of this Agreement is the date as of which this Agreement has been executed by all parties hereto.
	 	 	77.2	 	This Agreement shall terminate when terminated by DIGIDEAL or PDS FINANCIAL as provided in this Agreement. If neither party terminates this Agreement as provided herein, then appropriate provisions of this Agreement shall
be applied until complete cessation of all use of The Patents, Designated Trademarks, The Copyrights, and Designated Technology by PDS FINANCIAL or any licensee or sublicensee, or until no further payments are due hereunder, whichever is
longer.
	
78.	
 	

ARBITRATION
	 	 	78.1	 	Any controversy or claim arising out of or relating to this Agreement or the breach of any representation, warranty, covenant or agreement contained herein, shall be decided by arbitration in accordance with the Commercial
Arbitration Rules ("C.A.R.") of the American Arbitration Association ("A.A.A.") then obtaining, unless the parties otherwise mutually agree in writing. The dispute shall be decided by a panel of three arbitrators (each an "Arbitrator" and
collectively, the "Arbitrators") one arbitrator chosen by each DIGIDEAL and PDS FINANCIAL, and the third by the two selected arbitrators in accordance with C.A.R. and A.A.A. The decision and the award of damages rendered by a majority of the
Arbitrators shall be final and binding and judgment may be entered upon it in any court having jurisdiction thereof.
	 	 	78.2	 	The arbitration shall be held as promptly as practicable after actual receipt of notice that the other party has filed a notice for arbitration with the A.A.A. the "Notice") on such a date, and at such a place and time
convenient to the parties and to the Arbitrators, except that if the parties cannot agree, the Arbitrators shall decide such date, place and time. The Arbitrators shall make their decision promptly and any award of damages shall be made, unless
otherwise mutually agreed by the parties in writing, no later than fifteen (15) days from the date of closing of the hearings or if oral hearings have been waived, from the date of transmitting the final statements and proofs to the
Arbitrators.

Page 27 of 31

  

79. EXECUTION BY DIGIDEAL—DIGIDEAL CORPORATION  

	Date: 3/1/01	 	 	 	By:	 	/s/ DON MILLER   
 Don Miller, CFO
	State of Washington	 	)	 	 	 	 
	 	 	)	 	ss	 	 
	County of Spokane	 	)	 	 	 	 

    I
certify that I know or have satisfactory evidence that                        signed this instrument, and upon oath acknowledged
that he had authority to act in
behalf of DIGIDEAL Corporation and further acknowledged this instrument to be the free and voluntary act of such party for the uses and purposes mentioned in this instrument. 

	Dated: 3/1/01	 	 	 	/s/    
	 	 	 	 	
 Notary Public
	 	 	 	 	Residing at Spokane, WA
	[SEAL]	 	 	 	My appointment expires:    

Page 28 of 31

 

80. EXECUTION BY PDS FINANCIAL—PDS FINANCIAL  

	Date: 02/23/01	 	 	 	By:	 	/s/ PETER CLEARY   
 Peter Cleary

President

PDS Financial
	State of Nevada	 	)	 	 	 	 
	 	 	)	 	ss	 	 
	County of Clark	 	)	 	 	 	 

    I
certify that I know or have satisfactory evidence that Peter Cleary signed this instrument, and upon oath acknowledged that he had authority to act in behalf of PDS FINANCIAL and
further acknowledged this instrument to be the free and voluntary act of such party for the uses and purposes mentioned in this instrument. 

	Dated: 02/23/01	 	 	 	/s/    
	 	 	 	 	
 Notary Public
	 	 	 	 	Residing at Clark County, Nevada
	[SEAL]	 	 	 	My appointment expires: 1/16/2005

Page 29 of 31

 

81. APPENDIX A—DESIGNATED TRADEMARKS  

    The Designated Trademarks at the time of execution include: 

DIGITAL
21

DIGITAL CARD

DIGITAL CARDS

DIGIDEAL

DIGIDEALER

DIGITAL DEAL

DIGITAL DEALER

DIGITAL CARD SYSTEM

DCS

BONANZA BLACKJACK 

Page 30 of 31

 

82. APPENDIX B—EXEMPLARY MORTGAGE  

 
 

MORTGAGE OF PATENT RIGHTS    
  

    PDS FINANCIAL does hereby mortgage and grant a security interest to DIGIDEAL in the following pending patent applications and any patents resulting therefrom.
The mortgage and security interest granted hereby are used to secure obligations arising under a certain agreement entitled, "AGREEMENT FOR TECHNOLOGY TRANSFER, MANUFACTURE, DISTRIBUTION AND AFFECTING
PATENT, TRADEMARK AND COPYRIGHTS" executed between such parties on June 16, 1999 and as modified in accordance with the terms of such agreement. PDS FINANCIAL agrees not to sell, transfer,
convey or otherwise encumber any of the patent rights secured by this Mortgage unless agreed to in writing by DIGIDEAL or if done as authorized in said agreement. 

Signature 

Notary
certificate 

Page 31 of 31

QuickLinks

MORTGAGE OF PATENT RIGHTS<PAGE>
                                                                   Exhibit 10.1
                                                                   Confidential
                                                            Reg.# 1268, Copy #1

                                    LICENSE
                          FOR THE RIGHT OF SUBSOIL USE

series KMN        round seal          number  00681          type of license NE

ISSUED   TO    Open Joint Stock Company
               ----------------------------------------------------------------
               "Khantymansiyskneftegasgeologia"
-------------------------------------------------------------------------------
               (business operating entity -holder of this license)

REPRESENTED BY Pershin Alexander Pavlovitch, the General Director
               ----------------------------------------------------------------
               (full name of the person representing business operating entity)

FOR THE PURPOSE OF AND FOR THE FOLLOWING TYPES OF OPERATIONS: oil and gas
production within KAMENNOYE licensed area (Eastern part) of Krasnoleninskoye
oil-gas and condensate field

SUBSOIL PLOT IS LOCATED in Khanty-Mansiysk and Oktiabrskiy district of Khanty
Mansiysk Autonomous Okrug, Tuymen Region
-------------------------------------------------------------------------------
                   (name of district, region, area, republic)

DESCRIPTION OF THE BOUNDARIES OF THE SUBSOIL PLOT, COORDINATES OF THE ANGLE
POINTS, THE COPIES OF THE SURVEY PLANS AND CROSS - SECTIONS, ETC., ARE ATTACHED
IN ANNEXES NO. 1,2.
          (# of Annex)

THE RIGHT FOR USE OF LAND PLOTS RECEIVED FROM

-------------------------------------------------------------------------------
     (name of the body, issuing permission, number and date of resolution)

THE COPIES OF THE DOCUMENTS AND THE DESCRIPTION OF A LAND PLOT ARE ATTACHED IN
ANNEX
-------------------------------------------------------------------------------
                       (number of Annex, number of pages)

SUBSOIL PLOT HAS THE STATUS OF              subsoil allotment
                               ------------------------------------------------
                                     (geological or subsoil allotment)

THE EXPIRATION DATE OF THIS LICENSE                  06/03/2013

                          Khanty-Mansiysk Autonomous Okrug
                          Committee for natural resources
                          Territorial Fund of geological information
                          REGISTERED
                          December 2, 1997
                          In the registrar No.KMN 00681-NE
                                            Square seal

<PAGE>

THE FOLLOWING DOCUMENTS ARE THE INTEGRAL PARTS OF THIS LICENSE:

1. License Agreement on oil and gas production within Kamennoye licensed area
(Eastern part) of Krasnoleninskoye oil gas and condensate field - 19 pages
-------------------------------------------------------------------------------
                           (document, number of pages)

2. Topographic Plan of Kamennoye (Eastern part) licensed area of
Krasnoleninskoye oil gas and condensate field - 1 page
-------------------------------------------------------------------------------

3. Certificate of angle coordinates of Kamennoye licensed area of
Krasnoleninskoye field (Eastern part) - 1 page
-------------------------------------------------------------------------------

4. Agreement on major principles of relations between "Yugraneft" and
"Khantymansiyskneftegasgeologia" concerning exploration, development and
operation of Eastern part of Kamennoye field dated April 29, 1993 - 1 page
-------------------------------------------------------------------------------

<TABLE>
<S>                                                        <C>
AUTHORIZED REPRESENTATIVE OF THE MINISTRY OF               AUTHORIZED REPRESENTATIVE OF THE STATE BODY OF
NATURAL RESOURCES                                          THE SUBJECT OF FEDERATION
Chairman of the Committee of Natural Resources             Head of the Administration of Khanty-Mansiysk
----------------------------------------------             ----------------------------------------------
Khanty-Mansiysk Autonomous Okrug                           Autonomous Okrug
----------------------------------------------             ----------------------------------------------

Sergeeva Nadezhda Alexandrovna                             Filipenko Alexander Vasilievich
----------------------------------------------             ----------------------------------------------

Round seal                                                 Round seal
Signature, date 11/13/97                                   Signature, date 11/17/97
</TABLE>

              MANAGEMENT OF THE ENTERPRISE-HOLDER OF THIS LICENSE:
               Pershin Alexander Pavlovitch, the General Director
                       OJSC Khantymansiyskneftegasgeologia

                                   Round seal
                            Signature, date 11/12/97

<PAGE>

                                                                  Addendum No.1
                                                     To License KMN No 00681 NE

                                LICENSE AGREEMENT
                            ON OIL AND GAS PRODUCTION
                   IN KAMENNOYE (EASTERN PART) LICENSED AREA,
                    KRASNOLENINSKI OIL-GAS CONDENSATE FIELD
                     WITHIN KHANTY-MANSIYSK AUTONOMOUS AREA

                                    PREAMBLE

         This License Agreement (hereinafter referred to as the "Agreement")
was executed in furtherance of the License Agreement of September 18, 1996
(License KMN No 00373 NE) between the Ministry of Natural Resources of the
Russian Federation (hereinafter referred to as the Ministry) acting as a
federal authority for the management of state-owned subsoil, the executive
authority of the Khanty-Mansi Autonomous Area represented by the
Administration of the Khanty-Mansi Autonomous Area (hereinafter referred to
as the Administration), on the one hand, and Open Joint Stock Company
Khantymansiyskneftegazgeologia (hereinafter referred to as OJSC KMNGG)
registered by the Administration of the Khanty-Mansiysk Autonomous Area,
registration No.217 of June 24, 1996, on the other hand.

         This Agreement shall supersede and terminate original Addendum No.1
"License Agreement..." and Addendum No. 3 "Angular Coordinates" to License
KMN No 00394 NE and form an integral part of License KMN 00 ___ NE issued on
_______ ____, 199 .

         The License shall be renewed pursuant to Article 17-1 of the Federal
Law "On Subsoil" following the change of the company name from Open-End Joint
Stock Company Khantymansiyskneftegazgeologia to Open Joint Stock Company
"Khantymansiyskneftegazgeologia under the Law "On Joint Stock Companies".

         The Parties agreed as follows:

                             ARTICLE 1. DEFINITIONS

         1.1. Unless otherwise expressly specified in this Agreement words used
in singular include plural and words used in plural shall include singular.

         1.2. The Parties agreed upon the following meaning of the terms given
below:

         BUDGET shall mean a document reflecting itemized earnings and
expenditures of OJSC KMNGG Oil Operations over a Calendar Year.

         CALENDAR YEAR shall mean a Gregorian year beginning from the date of
incorporation and ending on December 31 of the same year. Subsequent years shall
start on January 1 and end on December 31.

         COMMERCIAL DISCOVERY shall mean one or more fields or accumulations
within the Licensed Area collectively or individually scheduled for
commercial operation.

<PAGE>

         OIL FIELD shall mean a subsoil accumulation of hydrocarbon deposits
in one or several collecting reservoirs or horizons located one under another
and considered as a whole for the purposes of efficient development.

         ROYALTY shall mean a charge for subsoil use.

         DEPOSIT shall mean a subsoil accumulation of hydrocarbons within the
same collecting basin.

         OIL OPERATIONS shall mean any operations pertaining to exploration,
construction, development of an oil field, production, transportation,
storage and distribution of Hydrocarbons and any other works relating to
operations contemplated hereunder.

         AUTHORITIES shall mean the Ministry of Natural Resources of the
Russian Federation or its regional branch and the Administration of the
Khanty-Mansiysk Autonomous Area authorized to regulate the use of subsoil
pursuant to the Law of the Russian Federation "On Subsoil".

         PROGRAM shall mean a document describing a detailed scope of works
under all types of the Oil Operations to be performed by OJSC KMNGG during a
Calendar Year.

         AGREEMENT shall mean this Agreement and all addenda forming its
integral part including any amendment, addition, substitution etc. which may
be made further upon approval by the Parties.

         PRODUCTION AREA shall mean a part of the Licensed Area allocated to
OJSC KMNGG to organize production of the oil field, which has a commercial
definition.

         LICENSED AREA shall mean an area specified in Article 2 hereof located
within the boundaries and described in detail in Article 3 where the Authorities
shall grant OJSC KMNGG an exclusive right of oil and gas exploration and
production.

         HYDROCARBONS (HC) shall mean an aggregate of solid, liquid and/or
gaseous hydrocarbons and all other associated and co-produced substances
including but not limited to Crude Oil, Natural and Associated Gas, Condensate
and their products.

         CONDENSATE shall mean a natural mixture of light hydrocarbon compounds
(C5 and higher) separated or extracted from Natural Gas in a liquid state.

         ASSOCIATED GAS shall mean gaseous hydrocarbons produced together with
Crude Oil.

         NATURAL GAS shall mean hydrocarbons in gaseous state in the atmospheric
environment at normal temperature and pressure as well as nitrogen, hydrogen
sulfide, helium and other gases.

         CRUDE OIL shall mean a mixture of hydrocarbons and any associated
substances extracted from wells in liquid state at atmospheric pressure as well
as bitumen, ozocerite and condensate obtained from Natural Gas.

         SUBSOIL ALLOTMENT shall mean a geometrized subsoil block granted to
a subsoil user under a license for the development of mineral resources.

                                       2
<PAGE>

         GEOLOGICAL ALLOTMENT shall mean a subsoil area granted to a subsoil
user under a license for geological prospecting without any material
infringement of its integrity.

         PLANNED CAPACITY shall mean output by year.

         ATTAINING PLANNED CAPACITY shall mean the commencement of a field
development subject to approved levels of oil and gas production.

         CCD shall mean the Central Commission for the Development of Oil and
Gas Deposits of the Ministry of Fuel and Energy of the Russian Federation.

         SER shall mean the State Examination of Mineral Resources of the
Russian Federation.

         RRC shall mean the Regional Reserves Commission.

         RCDD shall mean the Regional Commission for the Development of
Deposits.

         CCR oil shall mean the Central Commission of the Russian Ministry of
Natural Resources responsible for state expertise of oil, natural gas and gas
condensate reserves.

                         ARTICLE 2. SUBJECT OF AGREEMENT

         2.1. This Agreement shall set forth terms and conditions of oil and gas
production (including exploration) within the Licensed Area.

         2.2. The Agreement shall form an integral part of the License for
subsoil use of the Kamennoye (Eastern Part) Licensed Area within the
Krasnoleninski oil-gas condensate field renewed for OJSC KMNGG and specify
basic terms of subsoil use to produce oil and gas (including exploration
thereof) within the territory assigned the status of a Subsoil Allotment
limited by the depth of the weathering crust designated on the topographical
plan by angular points with coordinates given in the table below:

                                       3
<PAGE>

<TABLE>
<CAPTION>
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
  No.      Latitude north    Longitude east          No.          Latitude north       Longitude east
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
<S>           <C>               <C>                   <C>            <C>                  <C>
   1          61 12 00          67 06 00              11             61 45 00             67 35 00
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   2          61 09 00          67 06 00              12             61 45 00             67 28 00
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   3          61 09 00          67 36 00        13 (well 599)       61 41 51 35         67 27 05 75
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   4          61 18 00          67 36 00         14 (well 22)       61 39 10 18         67 26 40 68
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   5          61 18 00          67 42 00         15 (well 5)        61 32 35 97         67 27 01 22
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   6          61 30 00          67 42 00         16 (well 62)       61 27 21 52         67 29 00 78
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   7          61 30 00          67 39 00         17 (well 50)       61 21 08 32         67 29 52 14
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   8          61 39 00          67 39 00        18 (well 117)       61 17 11 94         67 24 01 95
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   9          61 40 00          67 36 00        19 (well 143)       61 14 01 56         67 14 33 39
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
   10         61 42 00          67 34 00
--------- ----------------- ------------------ ----------------- ------------------ ---------------------
</TABLE>

2.3. The development of the KAMENNOYE Licensed Area (eastern part) of the
Krasnoleninski oil-gas and condensate field shall be coordinated by OJSC
Condpetroleum (referred to as PA "Krasnoleninskneftegaz" in the original
license agreement).

         The interface between OJSC KMNGG and OJSC Condpetroleum shall be as
specified in Act No.120 dated April 17, 1992 of the Administration of the
Khanty-Mansiysk Autonomous Area and run along the line of wells
599-22-5-62-50-117-143 (the interface certificate of July 3, 1996 kept in the
license file).

                   ARTICLE 3. DESCRIPTION OF THE LICENSED AREA

         3.1. The size of the Licensed Area shall be 876 sq km.

         3.2. The Licensed Area shall include the Kamennoye area (eastern
part) of the Krasnoleninski oil-gas condensate field within the
Khanty-Mansiysk and Oktyabrski Districts and the adjacent territory outlined
under Article 2.2 hereof.

         3.3. As of February 20, 1996, the License Area comprised 3 ancestral
plots (owned by N.N. Plesovskikh, A.V. Mikurov and V.I. Slinkin) located in the
Khanty-Mansiysk District and as of September 3, 1997 1 ancestral plot (owned by
A.B. Palyanova) located in the Oktyabrski District.

         3.4. The Licensed Area shall require additional exploration within the
framework of the Exploration Project approved by Protocol No. 1722 of the
Central Commission for the Development of Oil and Gas Deposits dated July 6,
1994.

                     ARTICLE 4. AUTHORIZATION OF OPERATIONS
                       AND DISPOSAL OF EXTRACTED RESOURCES

          4.1. OJSC KMNGG shall be authorized to perform exploration,
construction, development, production and distribution of products extracted
in the Licensed Area and other works required to attain the objectives of
this Agreement.

         4.2. Under this Agreement and applicable law of the Russian
Federation and regulations of the Khanty-Mansiysk Autonomous Area the license
holder (OJSC KMNGG) shall be granted the title

                                       4
<PAGE>

for the volume of produced hydrocarbons specified in a bilateral acceptance
certificate at the time the volume of output is determined by meters.

         The output shall be recorded by meters installed at the end point of
the product release from the Licensed Area (such meters shall comply with
requirements for commercial meters).

         4.3. The entire stock of wells drilled in the Kamennoye field shall
be delivered to the license holder (OJSC KMNGG) pursuant to the Regulations
for the Delivery and Operation of Deep Oil and Gas Wells Drilled at the Cost
of the Federal Budget and Reflected on Balance Sheets of State-Owned Survey
Entities approved by the Committee for Subsoil of the Russian Federation (on
March 27, 1995), State Committee for the Management of State Property of the
Russian Federation (on August 7, 1995), State Mining Safety Inspection (on
April 1, 1995) and the Ministry of Fuel and Energy of the Russian Federation
and registered by the Ministry of Justice of the Russian Federation under No.
953 on September 25, 1995 within the period specified in this Regulation.

         Any wells abandoned or scheduled for abandonment within the Licensed
Area [Illegible] funded from the federal budget (including the mineral
replacement tax rates) shall be delivered to OJSC KMNGG (license holder) to
exercise supervision of their condition.

                                ARTICLE 5. TITLE

         5.1. OJSC KMNGG may own, manage and dispose of the assets acquired
by OJSC KMNGG from its profit and obtained credits as provided for by
applicable civil law. The owner shall be entitled to manage such assets at
his discretion provided it complies with applicable laws and regulations and
does not infringe on legal interests of third parties.

         5.2. Provisions of Article 5.1. shall not apply to assets owned by
third parties or leased by OJSC KMNGG.

                      ARTICLE 6. GEOLOGICAL SUBSOIL DATA

         Initial data and results of its processing shall include those funded
by the government and by OJSC KMNGG.

         The title for geological and other subsoil data shall be protected
as provided for by applicable law of the Russian Federation.

         6.1. Under article 27 of the Law "On Subsoil" any information
acquired with state funds shall be deemed the property of the State. The
Authorities shall cause the disclosure to OJSC KMNGG of geological data
available in regional and district geological and geophysical databases in
compliance with the Regulations for Storage, Use and Disclosure of Subsoil
Data Funded by the State" dated November 15, 1994, No. 61/2952, approved by
the Committee for Subsoil of the Russian Federation and the Administration of
the Khanty-Mansiysk Autonomous Area.

         6.2. Additional subsoil data on the Licensed Area not included in
the mandatory list compiled pursuant to approved industry instructions and
regulations shall be acquired by OJSC KMNGG under direct agreements with data
producers in compliance with applicable law.

         Information on executed transactions shall within 10 days be
forwarded to the regional branch of the Ministry of Natural Resources to be
registered on a confidential basis.

                                       5
<PAGE>

         6.3. Subsoil data and results of its processing funded by OJSC KMNGG
shall be deemed the property of OJSC KMNGG.

         OJSC KMNGG shall provide the Authorities with such data free of
charge in the format and within time limits established by the Authorities,
and shall specify the terms of its use.

         6.4. For the purpose of production or research OJSC KMNGG may use
50% of the core material sawn axially lengthwise. The remaining core shall be
deemed state-owned national wealth and shall be kept by the enterprise
according to applicable standards.

         If the Authorities decide to collect core materials OJSC KMNGG shall
pass the core to the Authorities free of charge.

                           ARTICLE 7. TERM OF VALIDITY

         7.1. Provisions of this Agreement shall come into effect on the date of
registration of the renewed License.

         7.2. This Agreement shall become effective on the date of
registration of renewed License KMN No ___________ NE under the Law of the
Russian Federation "On Subsoil" and terminate on June 3, 2013 concurrently
with the expiration of original License KMN No 00029 NE.

         OJSC KMNGG may apply for the extension of the term hereof and the
Authorities may grant such extension according to the approved development
Program provided OJSC KMNGG performs the approved Program of Operations as
required by the Law of the Russian Federation "On Subsoil".

         7.3. OJSC KMNGG may at any time terminate this Agreement on a ninety
(90) days written notice to the Authorities. Such termination shall not
release OJSC KMNGG from its outstanding obligations under this Agreement to
be fulfilled prior to delivery of the acknowledgment of its termination.

         The Authorities may at any time suspend or terminate this Agreement
by a written notice to OJSC KMNGG if OJSC KMNGG fails to comply with decisive
conditions under articles 20, 21 and 23 of the Law "On Subsoil", articles 28
and 29 Law "On the Use of Subsoil" of the Khanty-Mansiysk Autonomous Area,
article 15 of the Regulations for Licensing the Use of Subsoil and the
Regulations for the Use of Subsoil in the Khanty-Mansiysk Autonomous Area,
namely upon occurrence of any of the following events:

          -    OJSC KMNGG bankruptcy;

          -    failure to comply with the "Requirements to and Special
               Conditions of Environmental Safety During the Development of
               Oil, Gas and Other Mineral Deposits in the Khanty-Mansiysk
               Autonomous Area issued by the Committee for Environment
               Protection and Natural Resources of the Khanty-Mansiysk
               Autonomous Area";

          -    failure to comply with established terms and schedule of payments
               for subsoil use under applicable tax law. Each payment shall
               be deemed made on the date the payment order is received;

          -    development of the field in violation of the technology
               provided for by the Project resulting in excessive losses of
               subsoil raw materials compared with established standards;

          -    violation of terms, and systematic violation of schedules and
               volumes of providing the Authorities with data specified
               herein;

          -    failure to conclude socio-economic agreements with the owners of
               ancestral lands located in the Licensed Area within periods
               specified herein;

          -    lack or inoperativeness of well measuring equipment except
               during regular maintenance, repair or replacement within
               prescribed time limits or lack of control over the level of
               field production.

         If this Agreement is terminated upon occurrence of any event described
above, OJSC KMNGG shall have at least a ninety (90) days notice.

         OJSC KMNGG may relinquish the Licensed Area and terminate this
Agreement upon at least three months notice to the Authorities. In such case
OJSC KMNGG shall pay all outstanding debts and

                                       6
<PAGE>

make all wells and other facilities technically safe as required by the
Authorities (undertaking conservation, dismantling, etc.). Upon signing a
statement of the safety of all facilities OJSC KMNGG shall be exempt from all
payments.

                      ARTICLE 8. UNDERTAKINGS OF OJSC KMNGG

         8.1. OJSC KMNGG shall perform all works in compliance with subsoil,
environmental and other laws and regulations of the Russian Federation, legal
acts and regulations of the Khanty-Mansiysk Autonomous Area enacted under
Russian law and applicable in the territory of the Khanty-Mansiysk Autonomous
Area.

         8.2. OJSC KMNGG shall develop the Licensed Area according to project
specifications duly approved by the RCDD (CCD).

         8.3. OJSC KMNGG shall provide required funding and procure or lease all
types of equipment and materials required for operations specified in the annual
Program and Budget.

         8.4. OJSC KMNGG shall bear full responsibility for the preparation and
efficient implementation of the annual Program and Budget.

         8.5. When selecting contractors and subcontractors to supply
machinery, equipment and materials OJSC KMNGG shall give preference to
Russian vendors provided they are competitive (in terms of quality, terms and
warranties of timely delivery, prices, timely fulfillment etc.).

         When selecting contractors and subcontractors to perform operations
and services in the Licensed Area OJSC KMNGG shall give preference to
business entities incorporated and operating in the Khanty-Mansiysk
Autonomous Area.

         8.6. OJSC KMNGG undertakes to perform all operations in a safe and
proper way according to applicable rules and requirements, and produce, to
the extent practicable, minimal adverse impact on environment, including
inter alia air, bodies of water, flora and fauna, other natural resources and
property.

         In case of failures, accidents or other emergencies OJSC KMNGG shall
take all possible steps to cope with the emergency, protect human lives and
property, prevent and rectify damage and its consequences to natural
resources, environment and people's health.

         8.7. By October 1, 1998 OJSC KMNGG shall conduct an ecological base
line study within the Licensed Area and by January 1, 1999 submit to
Khantymansiyskgeolcom and the Committee for Environment Protection and
Natural Resources of the Khanty-Mansiysk Autonomous Area an approved Program
of ecological improvement of the Licensed Area subject to annual revisions
and including a schedule (month and year) of specifications to be kept in the
license file.

         OJSC KMNGG shall perform its operations in compliance with article
45 of the Russian Law "On Environment Protection", established discharge and
release standards or temporarily agreed-on hazardous discharge and release
standards.

         8.8. OJSC KMNGG shall not install production facilities on the
territory of the State Reserve, "Yelizarovsky".

         8.9. OJSC KMNGG shall meet the conditions of safe operation set
forth in the project specifications and approved by the State Mining Safety
Inspection.

                                       7
<PAGE>

         8.10. Upon deciding on conservation (abandonment) of a mineral
retrieval or a subsoil section or the licensed block the subsoil user shall
within 3 weeks present for review and comment the Terms of Reference relating
to the conservation (abandonment) and reclamation thereof to the regional
branch of the State Mining Safety Inspection, Committee for Land Resources
and Land Management and Committee for Environment Protection and Natural
Resources.

         The Terms of Reference shall be subject to approval by the Authorities.

         Upon approval of the Terms of Reference the subsoil user shall
develop the Plan of conservation (abandonment) of a working or a subsoil
section or a licensed block and reclamation thereof to be agreed upon with
the regional branch of the State Mining Safety Inspection, Committee for Land
Resources and Land Management and Committee for Environment Protection and
Natural Resources and approved by the Authorities.

         Such abandonment and conservation operations shall be performed in
compliance with and within the periods specified in the Plan and article 26
of the Russian Law "On Subsoil".

         8.11. OJSC KMNGG shall comply with the terms of economic agreements
executed with owners of ancestral lands located within the Licensed Area.

         8.12. OJSC KMNGG shall perform construction according to
specifications approved by the State Ecological Expertise.

         8.13. OJSC KMNGG shall operate in compliance with the Russian Law
"On Protection and Use of Historical and Cultural Monuments" and include in
the Project archaeological examination and indemnification for destruction of
or damage to historical and cultural monuments.

         8.14. Relations between OJSC KMNGG and the Administrations of the
Khanty-Mansiysk and Oktyabrski Districts shall be conducted on the basis of
socio-economic agreements concluded at the time of the License issue and
thereafter by the common Act of the Administration of the Khanty-Mansiysk
Autonomous Area and the Committee for Subsoil of the Russian Federation No.
284/20 dated August 7, 1996, to be renewed every three years.

         The socio-economic agreements shall be submitted to
Khantymansiyskgeolcom and the Administration of the Autonomous Area to be
kept in the license file.

         8.15. Exploration, development and exploitation by OJSC KMNGG of the
eastern part of the KAMENNOYE field shall be guided by the Agreement for the
Concept of Relations between ANK Yugraneft and GGP
Khantymansiyskneftegazheologia dated April 29, 1993 forming an integral part of
the License.

         8.16. The Parties agreed to revise and adjust certain provisions of
the Agreement according to the schedule given below:

          -    production levels - annually upon receipt of the RCDD
               (CCD) Protocol;

          -    exploration scope - annually upon review of exploration
               plans;

          -    oil recovery factor - upon approval of reserves by the
               SER and CCRoil.

                         ARTICLE 9. RIGHTS OF OJSC KMNGG

         9.1. Upon consultation with the Authorities OJSC KMNGG may suspend
the field development in conformity with applicable industry regulations and
standards. The period of such suspension shall be included in term of the
License validity.

                                       8
<PAGE>

         9.2. OJSC KMNGG shall enjoy free use of any samples (core), seismic
tapes, results of a geophysical prospecting of wells and any other documents
prepared during operations hereunder and submit such materials for processing,
analysis and reviewing to any entities including foreign entities pursuant to
applicable law of the Russian Federation.

         9.3. Within the Licensed Area OJSC KMNGG may be licensed for the
production of wide-spread natural resources in particular clay, sand,
limestone, gypsum and other similar materials which may be required for the
Oil Operations provided payment of fees and taxes imposed under applicable
law.

         9.4. Within the Licensed Area OJSC KMNGG may drill water wells under a
duly issued license for subsurface water production and use water resources for
its operations provided compliance with applicable regulations and payment of
charges collected under law of the Russian Federation.

         9.5. To enable required operations OJSC KMNGG may use land plots and
infrastructure facilities (motor and rail roads, communication lines, public
health centers, cultural facilities etc.) on generally accepted terms making
appropriate payments at applicable or specially agreed upon rates.

         9.6. Land claims required for operations under License KMN
No____________ NE shall be satisfied based on the Land Law and duly approved
project documents.

                              ARTICLE 10. REPORTING

         10.1. OJSC KMNGG, on request, shall provide the Authorities with
access to all original documents pertaining to its operations within the
Licensed Area including but not limited to geological, geophysical and
geological engineering, well construction, field development reports,
financial and accounting records etc. (which list shall not be deemed
exhaustive) as required by applicable Federal Law, legal acts and regulations
of the Khanty-Mansiysk Autonomous Area and this Agreement.

         10.2. Annually by March 1 of each year OJSC KMNGG shall present to
the Authorities an annual license agreement progress report in the format and
manner specified in the Act "On Reporting on the Compliance with Subsoil Use
Regulations" No. 142-171 adopted by the Committee for Geology and Subsoil Use
and the Administration of the Khanty-Mansiysk Autonomous Area on July 15-20,
1994.

         Upon consultations with OJSC KMNGG, the Authorities shall specify the
formats, contents and frequency of additional reports to be submitted by OJSC
KMNGG.

         The Authorities guarantee confidentiality of received information.

         10.3. OJSC KMNGG shall within one month inform the Authorities of any
discovery of oil and gas deposits within the Licensed Area and provide all data
pertaining to such deposits.

         10.4. The Authorities may audit any Oil Operations and therefore
supervise all operation stages and be represented at well testing and other
types of operations.

           ARTICLE 11. SUBJECTS OF LICENSING AND HYDROCARBON RESERVES

         11.1. The License shall cover the following deposits:

                                       9
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------ --------------------------------------
                    Deposit stratigraphic ID                              Deposit cadaster number
------------------------------------ ----------------------------- --------------------------------------
in   State   Balance   of   Mineral          in cadaster
Reserves
------------------------------------ ----------------------------- --------------------------------------
<S>                                        <C>                                     <C>
VK01 KAMEN                                    VK01 SOUTH                           18790
------------------------------------ ----------------------------- --------------------------------------
VK03 KAMEN                                 VK03 NORTH-EAST                         45100
------------------------------------ ----------------------------- --------------------------------------
VK02 KAMEN                                 VK02 NORTH-EAST                         41230
------------------------------------ ----------------------------- --------------------------------------
VK02 KAMEN                                   VK02 CENTRAL                          45030
------------------------------------ ----------------------------- --------------------------------------
BK02 KAMEN                                 VK02 SOUTH-EAST                         50710
------------------------------------ ----------------------------- --------------------------------------
VK02 KAMEN                                    VK02 EAST                            50720
------------------------------------ ----------------------------- --------------------------------------
VK02 KAMEN                                    VK02 SOUTH                           45050
------------------------------------ ----------------------------- --------------------------------------
VK03 KAMEN                                    VK03 EAST                            45120
------------------------------------ ----------------------------- --------------------------------------
VK03 KAMEN                                    VK03 NORTH                           45080
------------------------------------ ----------------------------- --------------------------------------
Uoo KAMEN                                      Uoo EAST                            45130
------------------------------------ ----------------------------- --------------------------------------
U2-3, site 143 and 103                            -                                  -
------------------------------------ ----------------------------- --------------------------------------
BASAL. FORM. KAMEN                             U10 EAST                            50740
------------------------------------ ----------------------------- --------------------------------------
WEATH. CRUST KAMEN                         WEATHERING CRUST                        30570
------------------------------------ ----------------------------- --------------------------------------
BASAL. FORM. KAMEN                            U10 SOUTH                            41210
------------------------------------ ----------------------------- --------------------------------------
</TABLE>

         11.2. Hydrocarbon reserves in the Kamennoye Licensed area as stated
in the State Balance of Mineral Reserves (Issue VI, OIL, Volume 6, West
Siberia, Khanty-Mansiysk Autonomous Area, Moscow, 1996) as of January 1, 1997
are given in the table below:

<TABLE>
<CAPTION>
----------------------------------- --------------- ----------------------------------------
               DESCRIPTION           CATEGORY OF                        TOTAL
                                       RESERVES
----------------------------------- --------------- -------------- ------------ ------------
                                                         OIL           GAS
----------------------------------- --------------- -------------- ------------ ------------
<S>                                   <C>              <C>            <C>
Geological reserves:                      C1           280916         3779
  oil, thousand t                         C2           206279         4023
  gas, mln cu m                        C1 + C2         487195         7802
  condensate, thousand t
----------------------------------- --------------- -------------- ------------ ------------
Recoverable reserves:                     C1            79466         3779
  oil, thousand t                         C2            43615         4023
  gas, mln cu m                        C1 + C2         123081         7802
  condensate, thousand t
----------------------------------- --------------- -------------- ------------ ------------
Oil recovery factor,                                    0.25
fractional
----------------------------------- --------------- -------------- ------------ ------------
</TABLE>

         11.3. By August 1, 1998, OJSC KMNGG shall submit to the RRC and the SER
an estimate of reserves within the Licensed Area.

                       ARTICLE 12. GEOLOGICAL EXPLORATION

         12.1. As of July 1, 1997 the Licensed Area accommodated 56 prospecting
boreholes.

         12.2. Based on a dedicated geological model and approved estimates
OJSC KMNGG shall develop a dynamic model and by January 1, 1999 prepare and
submit to the Authorities the Technology of the Kamennoye Field (Eastern
Part) Development. In 2000 OJSC KMNGG shall submit an oil recovery
enhancement technology to be approved by the CCD of the Russian Ministry of
Fuel and Energy.

                                       10
<PAGE>

         12.3. In 1998 OJSC KMNGG shall perform a detailed seismic survey (3D),
re-processing of available seismic data and develop a dedicated geological model
to be approved by the RRC in 1998.

         12.4. The 1997-1999 operations contemplated by the Pilot Operation
Project specify the drilling of 2 wells to additional exploration of the
deposits.

         12.5. OJSC KMNGG shall reprocess and reinterpret all original
geological and geophysical data with due regard for any data of the Kamennoye
field 3D seismic survey and additional data on the deposits geological and
production characteristics obtained during Pilot Operation.

         12.6. OJSC KMNGG shall be entitled to develop new deposits
discovered within the Licensed Area subject to applicable depth limits.
Within one year of a new deposit discovery appropriate amendments must be
made to relevant articles of this Agreement.

         12.7. Should the OJSC KMNGG operations in the Licensed Area prove
that a deposit under development or exploration spreads into adjacent areas
not licensed to other entities, the Authorities at the subsoil user request
shall either expand the Licensed Area or issue a new license for the adjacent
area under applicable law of the Russian Federation or declare a tender.

                         ARTICLE 13. TAXES AND PAYMENTS

         13.1. OJSC KMNGG shall make all payments provided for by applicable
Russian law and regulations of the Khanty-Mansiysk Autonomous Area adopted
thereunder.

         13.2. The license holder shall make regular payments specified in
applicable tax law of the Russian Federation, i.e.:

          - royalty - six (6) per cent of the product value and production
          losses in excess of standards specified in annual mining plans
          approved by the State Mining Safety Inspection.

         Land tax shall be assessed as provided for in the Law "On Land Tax"
of the Russian Federation.

         13.3. OJSC KMNGG shall make payments referred to in Article 13.2
above in roubles or extracted products, the form of such payment to be
approved by the Administration of the Khanty-Mansiysk Autonomous Area by
November 1 of the year preceding the year of planning.

                         ARTICLE 14. OIL AND GAS PRICES

         14.1. In the event the Licensed Area yields products of a
considerably different quality prices shall be fixed separately for each
product type (oil, gas, etc.) and grade (quality).

                 ARTICLE 15. RECORDING OF PRODUCED HYDROCARBONS

         15.1. The gross volume of mineral resources extracted by the
Licensed Area shall be recorded by the license holder and reflected in
accounts as specified by applicable law.

                                       11
<PAGE>

         15.2. OJSC KMNGG shall record the volumes and quantity of extracted
Hydrocarbons by methods and meters meeting applicable standards.

         15.3. The Authorities shall may inspect installed meters and control
recording methods and results.

         15.4. OJSC KMNGG shall records and control hydrocarbons production at
all licensed sites listed in Article 11 unless developed as a single occurrence.

         15.5. OJSC KMNGG shall equip each producing and injection well with
meters enabling daily recording of the outflow rate of producing wells and
injectability of injection wells.

         15.6. OJSC KMNGG shall take precise measurements of and log each
producing well's outflow rate and each injection well's injectability
capacity at least once a week, with a compulsory registration of the obtained
data. The frequency of such measurements may be further adjusted subject to
actual productivity.

         15.7. At least once a week OJSC KMNGG shall provide for precise
recording of water cutting of each producing well's product. The frequency of
such recording may be further adjusted.

         15.8. Development and control over development of the Licensed Area
and licensed deposits shall be performed in accordance with the Regulations
for the Development of Oil and Gas-and-Oil Fields, laws and regulations of
the Russian Federation and the Khanty-Mansiysk Autonomous Area.

                     ARTCILE 16. NATURAL AND ASSOCIATED GAS

         16.1. In the event of a discovery of Natural Gas deposits OJSC KMNGG
shall upon proper exploration and consultations with the Authorities
determine the Commercial nature of the discovery. Should the discovery be
declared Commercial all provisions of this Agreement shall apply.

         In such case OJSC KMNGG may be granted other special concessions
provided they are justified by particular conditions of the Natural Gas deposit
exploitation.

         If it is necessary to determine the quality of Natural Gas for
production sharing and cost recovery purposes, then it shall be assumed that
1,150 cu m of gas are equivalent to 1 t of oil.

         This convention may be adjusted after the discovery of the Natural
Gas Field subject to actual quality and composition of Natural Gas.

         16.2. The portion of Associated and Natural Gas neither intended for
sale nor included in the product utilized in the Oil Operations shall be
efficiently used to enhance the Crude Oil production through injection of the
gas into the stratum. The flaring of Associated and Natural Gas shall comply
with reasonable standards approved by the Authorities, the State Mining
Safety Inspection and the Regional Committee for Environment Protection and
Natural Resources.

                    ARTICLE 17. OIL AND GAS PRODUCTION LEVELS

                                       12
<PAGE>

         17.1. OJSC KMNGG shall maintain the oil and gas production levels
specified in Protocol No. 2148 dated May 22, 1997 of the Central Commission
for the Development of Oil and Gas-and-Oil Fields of the Russian Ministry of
Fuel and Energy and approved by the Oil and Gas Committee of the
Administration of the Khanty-Mansiysk Autonomous Area.

<TABLE>
<CAPTION>
------------- ------------- ------------------------------------------------ -------------- -------------
    YEAR      SITE                         PRODUCTION LEVEL                  Oil recovery       Gas
                                                                                factor      utilization,
                                                                              (current),         %
                                                                              fractional
------------- ------------- ------------- ----------------- ---------------- -------------- -------------
                                oil,            gas,          condensate,
                             thousand t       mln cu m        thousand t
------------- ------------- ------------- ----------------- ---------------- -------------- -------------
    <S>       <C>           <C>             <C>             <C>               <C>             <C>
    1997      K.V. bas.         46.2            9.9                              0.002           5
    1998      K.V. bas.         58.9           12.7                              0.003           10
------------- ------------- ------------- ----------------- ---------------- -------------- -------------
------------- ------------- ------------- ----------------- ---------------- -------------- -------------

</TABLE>

         17.2. Hydrocarbons extraction during the exploration shall not
exceed 5% of total recoverable reserves (C1 + C2), i.e. maximum 6,154.05
thousand t.

         17.3. The oil and gas production levels in 1999 and the years to
follow shall be adjusted in additional agreements with the Committee for Oil,
Gas and Natural Resources of the Administration of the Khanty-Mansiysk
Autonomous Area before November 1 of each year preceding the planned year,
based on the CCD protocols.

         Such additional agreements for oil and gas production levels shall be
submitted to Khantymansiyskgeolcom to be kept in the license file.

         17.4. Upon receipt of a new Program, oil production levels for the
entire period of the field development shall be subject to revision.

                        ARTICLE 18. ACCOUNTING AND AUDIT

         18.1. All mineral deposits extracted in the Licensed Area shall be
recorded by the license holder and reflected in the realization account in case
of transfer to other entities.

         18.2. For the purposes of this Agreement the Russian statutory
principles of accounting and auditing shall be applied.

         18.3. The Authorities shall bear the expenses, costs and risks
relating to inspections and audits.

         18.4. OJSC KMNGG shall at its expense provide transportation
for inspections of conditions in the Licensed Area.

                           ARTICLE 19. CONFIDENTIALITY

         19.1. All information received or acquired by any Party during its
operations shall be deemed confidential. The procedure and conditions of the
use of such information and protection shall be specified by the information
proprietor pursuant to the Russian Federation Law "On Information,
Information Technology and Protection of Information ".

         19.2. Any information, the illegitimate use of which may cause harm
to its proprietor, owner, user or other party, shall be protected in the
manner specified. The information proprietor may exercise control

                                       13
<PAGE>

over compliance with information protection requirements and prohibit or suspend
processing of such information in case of non-compliance.

         19.3. Unless otherwise provided for by applicable law,
confidentiality provisions contained in this Article shall remain in effect
for five (5) years after termination hereof.

                   ARTICLE 20. RESPONSIBILITIES OF THE PARTIES

         20.1. OJSC KMNGG shall bear full responsibility to the Authorities
and/or third parties for the consequences of any actions, decisions or
omissions of OJSC KMNGG or its employees.

         20.2. OJSC KMNGG shall not be liable for any damage caused by the
Authorities or third parties during the term hereof.

         20.3. The Authorities shall bear full responsibility in conformity
with Laws of the Russian Federation for their actions and indemnification for
misconduct - in a duly lawful manner.

                                       14
<PAGE>

                               ARTICLE 21. WAIVER

         21.1. Any waiver of undertakings by either Party shall be executed in
writing and signed by both Parties.

                               ARTICLE 22. NOTICES

         22.1. Any notices, applications, requests etc. required, permitted
or given hereunder shall be in writing and shall be deemed to have been duly
executed or given if delivered by courier, mail, telegraph, teletype or fax.

         The Parties shall inform each other beforehand in writing of their
respective addresses and in a timely manner of any modifications thereof.

         22.2. A notice shall become effective at the time of its receipt or
rejection.

                            ARTICLE 23. GOVERNING LAW

         23.1. This Agreement, its provisions and Articles thereof shall be
governed, regulated and construed according to the law of the Russian
Federation and Acts of the Khanty-Mansiysk Autonomous Area.

                             ARTICLE 24. ARBITRATION

         24.1. The Parties shall take every effort to settle all disputes which
may in connection with the performance of this Agreement during its term or
thereafter by means of amicable negotiations.

         24.2. If the Parties fail to settle a dispute referred to in Article
24.1 above within ninety (90) day of a written notification thereof by either
Party, either Party may give the other Party a ninety (90) days notice of its
intention to submit the matter for final settlement by arbitration in the
manner provided for by applicable Russian law.

                            ARTCILE 25. MISCELLANEOUS

         25.1. The headings of the Agreement are used solely for convenience and
shall not affect its construction or interpretation.

         25.2. Any amendments, corrections, additions or repeals of any
provisions of this Agreement can be made only by writing signed by both
Parties.

         25.3. The Authorities shall timely provide OJSC KMNGG with all legal,
normative and other official documents of the Russian Federation and the
Khanty-Mansiysk Autonomous Area or any entities or institutions affecting the
realization of the Oil Operations.

         25.4. If any provision hereof shall be held to be invalid, such
provisions shall be deemed deleted from this Agreement and remaining
provisions shall remain valid and effective provided there is a written
consent of the Parties.

                                       15
<PAGE>

                   ARTICLE 26. LEGAL ADDRESSES OF THE PARTIES

         THE MINISTRY OF NATURAL RESOURCES OF THE RUSSIAN FEDERATION:

         4/6 B. Gruzinskaya Str., Moscow 123812, Russian Federation

         THE ADMINISTRATION OF THE KHANTY-MANSIYSK AUTONOMOUS AREA:

         5 Mira Str., Khanty-Mansiysk, Tyumen Region, Khanty-Mansiysk
Autonomous Area 626200, Russian Federation

         LEGAL ADDRESS OF OPEN JOINT STOCK COMPANY
KHANTYMANSIYSKNEFTEGAZGEOLOGIA: Gornopravdinsk, Khanty-Mansiysk District,
Khanty-Mansiysk Autonomous Area, Tyumen Region

                                       16
<PAGE>

                           ARTICLE 27. EFFECTIVE DATE

This Agreement shall become effective on the date of the License renewal.

For the Russian Federation:                 For Subdivision of the Russian
                                            Federation:
AUTHORIZED REPRESENTATIVE OF THE            GOVERNOR OF THE KHANTY-MANSIYSK
MINISTRY OF NATURAL RESOURCES               AUTONOMOUS AREA
OF THE RUSSIAN FEDERATION,
CHAIRMAN OF THE COMMITTEE
 FOR NATURAL RESOURCES OF THE
KHANTY-MANSI AUTONOMOUS AREA
NADEZHDA ALEXANDROVNA SERGEEVA              ALEXANDER VASILYEVICH FILIPENKO

------------------------------------        ----------------------------------
       (signature)                                       (signature)
     NOVEMBER 13, 1997                                NOVEMBER 17, 1997
     -----------------                                -----------------

Seal: Ministry of Natural Resources         Seal: Administration of the Khanty-
of the Russian Federation                   Mansiysk Autonomous Area, Tyumen
Committee for Natural Resources of          Region
the Khanty-Mansiysk Autonomous Area

                          FOR OPEN JOINT STOCK COMPANY
                         KHANTYMANSIYSKNEFTEGAZGEOLOGIA,
                                  THE LICENSEE:

                                DIRECTOR GENERAL
                           OF OPEN JOINT STOCK COMPANY
                         KHANTYMANSIYSKNEFTEGAZGEOLOGIA
                           ALEXANDER PAVLOVICH PERSHIN

                            -------------------------
                                   (signature)

                               NOVEMBER 12, 1997

                    Seal: Russian Federation, Khanty-Mansiysk
                       OJSC KHANTYMANSIYSKNEFTEGAZGEOLOGIA

                                       17
<PAGE>

                                                                 Addendum No.2
                                                    to License KMN No 00681 NE

                                 TOPOGRAPHIC PLAN
                 OF THE KAMENNOYE (EASTERN PART) LICENSED AREA,
                   THE KRASNOLENINSKI OIL-GAS CONDENSATE FIELD

                                SCALE 1 : 200000

<TABLE>
<CAPTION>
-----------------------------------------------------    -----------------------------
<S>                                                      <C>
  CHIEF GEOLOGIST OF OJSC
"KHANTYMANSIYSKNEFTEGAZGEOLOGIA"                         V. B. SKOROBOGATOV
-----------------------------------------------------    -----------------------------
-----------------------------------------------------    -----------------------------
CHAIRMAN OF THE COMMITTEE  FOR NATURAL  RESOURCES OF
THE KHANTY-MANSIYSK AUTONOMOUS AREA                      N. A. SERGEEVA
-----------------------------------------------------    -----------------------------
-----------------------------------------------------    -----------------------------
CHAIRMAN OF THE  COMMITTEE  FOR OIL, GAS AND MINERAL
RESOURCES OF THE  ADMINISTRATION OF THE KHANTY-MANSIYSK
AUTONOMOUS AREA                                          H. I. ZMANOVSKI
-----------------------------------------------------    -----------------------------
</TABLE>

                                       18
<PAGE>

                                                                Addendum No. 3
                                                    To License KMN No 00681 NE

                               Angular Coordinates
                      of the KAMENNOYE area (Eastern Part),
                   the Krasnoleninski oil-gas condensate field

                               Angular coordinates

<TABLE>
<CAPTION>
          Point No.                    Latitude north                  Longitude east
----------------------------- ------------------------------- -----------------------------
        <S>                            <C>                             <C>
              1                           61 12 00"                      67 06 00"
              2                           61 09 00"                      67 06 00"
              3                           61 09 00"                      67 36 00"
              4                           61 18 00"                      67 36 00"
              5                           61 18 00"                      67 42 00"
              6                           61 30 00"                      67 42 00"
              7                           61 30 00"                      67 39 00"
              8                           61 39 00"                      67 39 00"
              9                           61 40 00"                      67 36 00"
             10                           61 42 00"                      67 34 00"
             11                           61 45 00"                      67 35 00"
             12                           61 45 00"                      67 28 00'
        13 (well 599)                   61 41' 51.35"                   67 27' 5.75"
        14 (well 22)                    61 39' 10.18"                  67 26' 40.68"
         15 (well 5)                    61 32' 35.97"                   67 27' 1.22"
        16 (well 62)                    61 27' 21.52"                   67 29' 0.78"
        17 (well 50)                    61 21' 8.32"                   67 29' 52.14"
        18 (well 117)                   61 17' 11.94"                   67 24' 1.95"
        19 (well 143)                   61 14' 1.56"                   67 14' 33.39"
----------------------------- ------------------------------- -----------------------------
</TABLE>

         Points 13-19 are included under Direction No. 120 by the Head of
Administration of the Khanty-Mansi Autonomous Area dated April 17, 1992.

Director General                                Senior Specialist
of OJSC KMNGG                                   of Khnantymansiyskgeolcom
V.D. Tokarev                                    S.P Yakovleva
(signature)                                     (signature)

Authorized Representative
of the Committee for Natural
Resources of the Khanty-Mansi
Autonomous Area
N.I. Zmanovsky
(signature)

                                       19
<PAGE>

                                                                   Addendum No.4
                                                     to License OII (1) 00681 IY

                                    AGREEMENT
                      on the Concepts of Relations between
                  JSOC Yugraneft and SGE Khantymasiyskgeologia
                during Exploration, Development and Operation
                      of the KAMENNOYE Field, Eastern Part

The City of Khanty-Mansiysk                                    April 29, 1993

                  JSOC "Yugraneft" in the person of Director General V.V.
Sidorchev and SGE Khantymansiyskgeologia in the person of Director General
V.D. Tokarev acting on the basis of the relevant Articles of Association
having exchanged opinions decided to specify the following concepts of
relations during exploration, development and operation of the Kamennoye oil
field:

         1. The Parties shall share Neocomian productive hydrocarbons strata
discovered so far and to be discovered in future as follows:

              JSOC Yugraneft - 50%
              SGE Khantymansiyskgnefegazeologia - 50%

         Jurassic deposits shall be licensed by SGE
Khantymansiysknefetazgeologia.

         This agreement shall apply to both extracted and non-extracted
hydrocarbons to the final depletion of the field. The Parties shall hold the
title for extracted hydrocarbons according to their shares specified above.

         2. The oil field exploration, development and operation shall be
jointly financed by the Parties according to their shares specified in
Clause 1 hereof.

         3. The Parties agreed that any modification of funding due to a
Party's failure to meet its obligations for financing field development and
operation shall result in adequate sharing of extracted hydrocarbons.

         4. SGE Khantymasiyskneftegazgeologia shall hold the license for
subsoil use in the eastern Part of the Kamennoye field.

         5. The Parties agreed that upon the execution hereof they shall
refrain from uncoordinated actions relating to the subject of this Agreement
which may cause harm to any Party hereof.

         6. The Agreement shall form an integral part of the License for
Subsoil use and become effective upon its signing and may be amended by
mutual consent of the Parties.

Director  General of Joint  Stock Oil       Director    General      of
Company Yugraneft                           Khantymasniyskneftegazgeologia
(signature)                                 (signature)
Round Seal                                  Round Seal

                                       20

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