UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Earliest Event Reported: May 18, 2016

 

Elite Data Services, Inc.

(Exact name of registrant as specified in its charter)

 

Florida

000-11050

59-2181303

(State or other jurisdiction of

incorporation or organization)

(Commission

File Number)

(IRS Employer

Identification No.)

 

4447 N. Central Expressway, Suite 110-135

Dallas, TX 75205

(Address of principal executive offices)

 

(972) 885-3981

(Issuer's telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

 

 

 

FORWARD LOOKING STATEMENTS

 

This Current Report on Form 8-K contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the near future. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future. We caution readers that any forward-looking statements are not guarantees of future performance and that actual results could differ materially from those contained or implied in the forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the terms and conditions of the agreement described herein. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations about the Company's future performance and the future performance of the entity being acquired, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in "Risk Factors" in the Company's recent Annual Report on Form 10-K, and the Company's recent Quarterly Reports, filed with the SEC, not all of which are known to the Company. The Company will update this forward-looking information only to the extent required under applicable securities laws. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of these forward-looking statements.

 

 
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Item 1.01 Entry into a Material Definitive Agreement

 

Note and Share Cancellation and Exchange Agreement

 

On May 18, 2016, the Elite Data Services, Inc. (the "Company") Company and Baker Myers and Associates LLC, a Nevada limited liability company ("Baker Myers," an entity owned by Sarah Myers, the President, Chief Operating Officer and Director of the Company ) executed a Note and Share Cancellation and Exchange Agreement (the "Share Exchange Agreement"), with respect to that certain unsecured Promissory Note (the "Original Baker Myers Note") dated on or about January 13, 2013, in the original amount of $587,500 (the "Original Amount"), pursuant to which Baker Myers agreed to forego and waive any and all right in, entitlement to or interest in (A) a total of $87,500 in principal, a total of $92,465 in accrued interest, late charges, reimbursable attorneys' fees, reimbursable expenses and any other sums due and payable under the Original Baker Myers Note totaling $179,952 (the "Cancelled Amount") as of the date of execution (the "Effective Date"), any future payments due under the Original Baker Myers Note and all or any other of Baker Myers's rights under the Cancelled Amount of the Original Baker Myers Note, thereby extinguishing and canceling the Cancelled Amount of the Original Baker Myers Note and terminating any and all of Company's obligations thereunder, (B) the Shares (hereinafter also referred to as the "Cancelled Shares") in exchange for the issuance an Option Agreement (the "Option Agreement"), registered in the Baker Myers's name to purchase up to a certain number of membership interests (the "EDM Membership Interest") of Elite Data Marketing LLC, a Florida limited liability company (the "EDM"), in an amount totaling one hundred percent (100%) of the ownership interest in EDM (the "Option 1"), (B) the issuance by Company to Baker Myers of a three-year "cashless" common stock purchase warrant (the "Warrant No. BM-1") for the right to purchase a total of 3,000,000 shares of Series B Preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, with certain rights and preferences as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), in exchange for the Cancelled Shares, as referenced in the Share Exchange Agreement, and (C) the issuance of an amended and restated convertible redeemable note (the "Redeemable Note") in the aggregate principal face amount of Five Hundred Thousand Dollars (US$500,000), at ten percent (10%) interest per annum commencing on date of execution (the "Effective Date"), due and payable by the Company in eight (8) separate equal quarterly payments of Sixty-Two Thousand Five Hundred Dollars (USD $62,500), plus accrued interest to date, due on the first day of each quarter beginning on the date of the first quarter following the date of execution of this Original Baker Myers Note, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein .

 

In addition, e ach of the agreements contains customary representations and warranties provisions.

  

The foregoing description of the Note and Share Cancellation and Exchange Agreement, Option Agreement and Warrant Agreement are qualified in its entirety by reference to the Note and Share Cancellation and Exchange Agreement, Option Agreement and Warrant Agreement filed as Exhibit 10.69 to this report and incorporated herein by reference.

 

Sixth Amendment to Line of Credit

 

On May 18, 2016, the Company and Sarh Myers, an individual (and also the President, Chief Operating Officer and Director of the Company) ("Myers") executed the Sixth Amendment to the Line of Credit Agreement (the "Sixth Amendment"), pursuant to which the parties mutually agreed to cancel and otherwise terminate the effectiveness of Revolving Line of Credit Agreement (the "Original LOC Agreement") dated September 1, 2013, as amended, up to a total amount of USD$50,000 for the purposes of providing Company with working capital, as needed from time to time, as set forth in the executed Promissory Note (the "Original Myers Note") dated on even date therewith, in the original amount of USD $50,000 (collectively referred to as the "Original Agreements"), whereby Myers would no longer extend any funds to the Company, pursuant to the terms of the Original Agreements, in exchange for the issuance of an amended and restated convertible redeemable note (the "Amended and Restated Note") in the principal amount of $175,000.00, at ten percent (10%) interest per annum commencing on January 1, 2016 (the "Effective Date"), due and payable to Myers by Company in seven (7) separate equal quarterly payments of Twenty-Fifty Thousand Dollars (USD $25,000), plus accrued interest to date, due on the first day of each quarter beginning on the date of the first quarter following the date of execution of this Note (each a "Maturity Date"), convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein.

 

 
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In addition, each of the agreements contains customary representations and warranties provisions.

 

The foregoing description of the Sixth Amendment and Amended and Restated Note are qualified in its entirety by reference to the Sixth Amendment and Amended and Restated Note filed as Exhibit 10.70 to this report and incorporated herein by reference.

 

First Amendment to Settlement Agreement

 

On May 18, 2016, the Company and Birch First Capital Fund LLC ("Birch First Capital") and Birch First Advisors LLC ("Birch Advisors") executed the First Amendment to the Settlement Agreement (the "First Amendment"), pursuant to which the parties mutually agreed to amend and restate the amended and restated convertible debenture (the "Original Amended Note") in the original amount of USD $300,000 (the "Original Amended Note Amount"), the convertible debenture (the "Original New Note") in the original amount of USD $300,000 (the "Original New Note Amount") and the original consulting agreement (the "Original Consulting Agreement") dated on or about July 23, 2015, to reflect the following: (a) the execution of an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No.1") in the principal amount of USD $400,000, at a rate of ten percent (10%) per annum commencing on July 23, 2015, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, and other terms and conditions set forth therein, (b) the issuance by Company to Birch First Capital a three-year "cashless" stock purchase warrant (the "Warrant No.1") for the right to purchase a total of 4,000,000 shares of Series B preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, on the terms and conditions set forth therein, (c) the execution of an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No. 2") in the principal amount of USD $300,000, at a rate of ten percent (10%) per annum commencing on July 23, 2015, convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 4.99% and other terms and conditions set forth therein, (d) the execution of an Amended and Restated Consulting Agreement (the "Amended and Restated Consulting Agreement") on the terms and conditions set forth therein, including, but not limited to, for a period of twenty-four (24) months, with consideration payable to Birch Advisors and/or its assigns in cash in the amount of Ten Thousand Dollars ($10,000.00) per month, including, any and all payments set forth Amended and Restated Redeemable Note No.2, and the issuance by the Company to Birch First Advisors and/or assigns a three-year "cashless" stock purchase warrant (the "Warrant No.2") for the right to purchase up to 1,000,000 shares of common stock of the Company (the "Common Warrant Shares") each month a strike price of $0.001 per share (the "Exercise Price"), and (e) the acceptance by the Company of the execution of the Assignment of Amended and Restated Redeemable Note No.2 (hereinafter referred to as the "Assigned Note") between Birch Advisors and Birch First Capital, in which Birch Advisors agreed to assign the ownership interest of Assigned Note to Birch First Capital, on the terms and conditions set forth therein, of which the Company was not a party, however, provided consent at the request of Birch Advisors and Birch First Capital.

 

In addition, each of the agreements contains customary representations and warranties provisions.

 

The foregoing description of the First Amendment Agreement, Amended and Restated Redeemable Note No. 1, Warrant No. 1, Amended and Restated Redeemable Note No. 2, Warrant No. 2, and Note Assignment are qualified in its entirety by reference to the First Amendment Agreement, Amended and Restated Redeemable Note No. 1, Warrant No. 1, Amended and Restated Redeemable Note No. 2, Warrant No. 2, and Note Assignment filed as Exhibit 10.71 to this report and incorporated herein by reference.

 

 
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Contractor Agreements

   

On May 18, 2016, the Company and Dr. James G. Ricketts, an individual (and also the Chairman and VP of Investor Relations of the Company) (the "Ricketts") executed an Agreement (the "Ricketts Agreement") for the continued engagement of Ricketts for his continued services to the Company and for such other services, as deemed necessary by the Board of Directors, from time to time, for a period of one year from the date of execution, and renewal for three (3) successive one (1) year terms unless terminated early. The Company agreed to compensate Ricketts in the form of (a) a total of $5,000 per month for the first year, and $10,000 per month for subsequent terms, payable in cash or converted into restricted common stock of the Company, at Ricketts discretion, pursuant to the Company's Stock Option Plan then in effect, (b) the right to participate in future stock options then in effect, and (c) a grant of a total of One Million (1,000,000) shares of Series B Preferred Stock at a per share price of $0.0001, as an inducement to enter into the Ricketts Consulting Agreement, as set forth in Subscription Agreement (the "Ricketts Subscription Agreement"), as described more fully in Item 3.02.

 

Pursuant to the terms of the Ricketts Agreement, the Company and Ricketts also executed a Board Services Agreement (the "Ricketts Services Agreement"), on even date, in which the Company agreed to pay to the Ricketts a fee in an amount equal Ten Thousand Dollars (USD $10,000), payable on a quarterly basis, in the form of cash and/or equity, in the form of shares of restricted common stock of the Company, pursuant to the terms and conditions of the Company's Stock Option Plan effective as of August 27, 2015 , and further agreed to provide certain legal protections of Ricketts from certain liabilities of the Company, existing now or in the future, to the fullest extent permitted by applicable law related to his duties under the Service Agreement, pursuant to the terms of the Indemnification Agreement (the "Ricketts Indemnification Agreement"), referenced by exhibit therein, executed on even date therewith.

 

The foregoing description of the Ricketts Agreement, Ricketts Subscription Agreement, Ricketts Services Agreement and Ricketts Indemnification Agreement are qualified in its entirety by reference to the Ricketts Agreement, Ricketts Subscription Agreement, Ricketts Services Agreement and Ricketts Indemnification Agreement filed as Exhibit 10.72 to this report and incorporated herein by reference.

 

On May 18, 2016, the Company and Stephen Antol, an individual (and also the Chief Financial Officer of the Company) (the "Antol") executed an Agreement (the "Antol Agreement") for the continued engagement of Antol for his continued services as the Chief Financial Officer of the Company, and also Secretary and Treasurer, and other services to be provided to the Company, as deemed necessary by the Board of Directors, from time to time, for a period of one year from the date of execution, and renewal for three (3) successive one (1) year terms unless terminated early. The Company agreed to compensate Antol in the form of (a) a total of $5,000 per month for the first year, and $10,000 per month for subsequent terms, payable in cash or converted into restricted common stock of the Company, at Antol's discretion, pursuant to the Company's Stock Option Plan then in effect, (b) the right to participate in future stock options then in effect, (c) a grant of a total of One Million (1,000,000) shares of Series B Preferred Stock at a per share price of $0.0001, as an inducement to enter into the Agreement, as set forth in Subscription Agreement (the "Antol Subscription Agreement"), as described more fully in Item 3.02, and (d) the execution of an Indemnification Agreement (the "Antol Indemnification Agreement"), on even date, in which the Company agreed to provide certain legal protections of Antol from certain liabilities of the Company, existing now or in the future, to the fullest extent permitted by applicable law related to his duties under the Antol Agreement .

 

The foregoing description of the Antol Agreement, Antol Subscription Agreement, and Antol Indemnification Agreement are qualified in its entirety by reference to the Antol Agreement, Antol Subscription Agreement, and Antol Indemnification Agreement filed as Exhibit 10.73 to this report and incorporated herein by reference.

 

Convertible Redeemable Note for Unpaid Invoices

 

On May 18, 2016, the Company and JMS Law Group PLLC ("JMS") executed a settlement letter (the "Settlement Letter") in which the parties agreed to settle unpaid invoices for services rendered by JMS to the Company in the amount of $20,000, and further agreed to pay JSM a total of $7,500 for continued services to the Company until July 31, 2016.

 

 
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Pursuant to the terms of the Settlement Letter, the Company issued to JMS a six month convertible redeemable note (the "Note") in the principal amount of USD $ 27,5 00, at a rate of ten percent (10%) per annum commencing on date of issuance , convertible into shares of the Company's common stock at a conversion price equal to the lesser of $0.01 per share or a a discount of fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, and other customary and standard terms and conditions set forth therein .

  

The foregoing description of the Settlement Letter and Note are qualified in its entirety by reference to the Settlement Letter and Note filed as Exhibit 10.74 to this report and incorporated herein by reference.

  

Third Amendment to Securities Purchase Agreement

  

On May 20, 2016, the Company and H Y H Investments, S.A. ("HYHI") executed the Third Amendment to the Securities Purchase Agreement (the "Third Amendment"), pursuant to which the parties agreed to further clarify and amend and restate certain provisions of the Original Purchase Agreement, First Amendment and Second Amendment (the "Original Purchase Agreement").

  

Pursuant to the terms of the Third Amendment, the parties mutually agreed to cancel the Original Purchase Agreement dated April 6, 2015, in exchange for a new Joint Venture Agreement (the "Joint Venture") executed on even date therewith, pursuant to which the Company and HYHI agreed to create a joint venture relationship using Elite Data Holdings S.A., a Honduras corporation, a wholly-owned subsidiary of Elite Gaming Ventures LLC, a Florida limited liability company ("EVG"), a wholly-owned subsidiary of the Company, and a distributor license from HYHI and El Mar Muerto Beauty Mineral, S.A., a Honduras corporation ("EMBM") to establish gaming operations (the "Purpose") by distributing and maintaining a total of eighty (80) slot machines in the cities of La Lima, Cortes; eighty (80) slot machines in the cities of Trujillo, Colon; and One Hundred and Sixty (160) slot machines in Roatan in the bay island of Honduras.

  

Pursuant to the terms of the Joint Venture, HYHI agreed to effect the distributor license (the "License") related to the Purpose, provided that the Company and EVG would be responsible for providing any and all financial and operational resources required to execute on the License granted to the Company, including, but not limited to, the funding for the initial and ongoing operating costs in the minimum amount of Five Hundred Thousand Dollars (USD $500,000) on or before December 31, 2016 (the "Initial Funding").

  

In addition, the Company and EVG agreed to pay HYHI consideration in the total amount of USD $10,000,000 (the "Total Consideration"), due and payable as follows:

  

(a) Initial Payment. An initial payment of $100,000, which was paid in the Original Purchase Agreement, as amended,

 

(b) Convertible Note. A further amendment and restatement of the amended and restated convertible note (the "Original Amended Note"), dated April 6, 2015, in the form of the amended and restated convertible redeemable note (the "Amended and Restated Redeemable Note") to reflect the original issuance date of January 1, 2016 (the "Restated Issuance Date"), and a decrease in the original principal amount from Nine Million Nine Hundred Thousand Dollars (USD $9,900,000) to Four Million Nine Hundred Thousand Dollars (USD $4,900,000) (the "New Principal Amount"), at ten percent (10%) interest per annum, due and payable to HYHI by DEAC as follows: (A) two (2) separate payments of Four Hundred Fifty Thousand Dollars (USD $450,000), plus accrued interest to date, due on July 1, 2016 and October 1, 2016, respectively, for a total of Nine Hundred Thousand Dollars (USD $900,000), and payable in cash or convertible into shares of common stock of DEAC at a conversion price equal to the lesser of $0.01 per share or fifty percent (50%) to the five (5) trading day average closing price immediately preceding the payment date, and (B) the remaining balance of Four Million (USD $4,000,000) payable in cash in a total of eight (8) equal quarterly installments of Five Hundred Thousand Dollars (USD $500,000), plus accrued interest to date, on the first day of each quarter beginning with January 1, 2017 and ending on January 1, 2019, convertible into shares of common stock of DEAC at fifty percent (50%) discount to the five (5) trading day average closing price immediately preceding the payment date, and other terms more fully described in the amended note set forth in the Amended and Restate Redeemable Note.

   

 
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(c) Revenue Share Plan. A revenue share split of any and all revenues derived from the Joint Venture (the "Revenue Share Plan") on a basis equal to twenty-five percent (25%) to EGV, and seventy-five percent (75%) to HYHI until such time as HYHI has received payment in full of the Total Consideration, and thereafter one hundred percent (100%) of the revenues shall be paid to EVG, for the term of this Agreement. Notwithstanding anything herein to the contrary, EVG shall be required to pay HYHI certain minimum licensing fee payments (the "Minimum Licensing Fee Payments") in the amount of Two Hundred Fifty Thousand Dollars (USD $250,000.00) due and payable to HYHI on or before 31st day of each quarter, beginning on January 1, 2017, if the total amount paid to HYHI in the then prior quarter from the seventy-five percent (75%) revenue split does not exceed that amount. In the event DEAC and EGV is unable to make the Minimum Licensing Fee Payments in full when due, DEAC shall pay HYHI the amounts owed in the form of the issuance of a new convertible redeemable note (the "Licensing Redeemable Note") for each such occurrence, in the form and on the same terms and Maturity Date as set forth in the Amended and Restated Redeemable Note.

 

The Joint Venture also included the option of the Company and EVG to acquire the ownership of EMBM and License directly, within thirty (30) days of the date payment in full of the Total Consideration is made to HYHI pursuant to the Agreement, at which time, EVG and Company would have the right to exercise an option (the "Option") to acquire one hundred percent (100%) of EMBM, including, but not limited to, any and all assets (e.g. gaming licenses, etc.), and liabilities required to continue the gaming operation set forth by the Joint Venture, for a purchase price of (USD $10.00) (the "Option Payment"), paid by the Company to HYHI. Upon receipt by HYHI of a written notice to exercise the Option and the Option Payment from EVG or Company, HYHI would execute any and all documents necessary to effect the assignment and transfer (the "EMBM Assignment") of one hundred percent (100%) of EMBM, including, but not limited to, any and all assets and liabilities required to continue the gaming operation set forth by the Joint Venture, to the Company, free of any encumbrances, liens, or other third party claims related to the DEAC and EGV, except for the obligations incurred from and remaining in the Joint Venture after the Assignment.

 

In the event of a termination, or if the Company is unable to provide the Initial Funding when due, or for a period not to exceed ninety (90) days in each monthly instance, the financial and operational resources needed to maintain the operations of the Company for its intended Purpose in an amount not less than Twenty-Five Dollars (USD $25,000) per month, less any revenues generated during such period, HYHI shall have the right to cancel the Joint Venture in writing, thus terminating any further obligations of the parties to this Agreement (the "Termination"), including the cancellation of any further Minimum Licensing Fee Payments and the combined total of any outstanding amounts owed by DEAC, in excess of One Million Dollars (USD$1,000,000.00), on the Amended and Restated Redeemable Note and all other Licensing Redeemable Notes, issued to HYHI which have not been converted, or otherwise assigned, sold or transferred by HYHI to one or more other parties prior to such Termination date.

 

The foregoing description of the Third Amendment, Joint Venture Agreement, and Amended and Restated Redeemable Note are qualified in its entirety by reference to the Third Amendment, Joint Venture Agreement, and Amended and Restated Redeemable Note filed as Exhibit 10.75 to this report and incorporated herein by reference.

 

Assignments to Elite Data Marketing LLC

 

As set forth in Item 8.01 the Company formed Elite Data Marketing LLC. On May 20, 2016, the Company executed an Assignment of Ownership Interest with its newly formed subsidiary, Elite Data Marketing LLC, pursuant to which the Company assigned and transferred (A) a certain amount of Company's ownership interest held in www.classifiedride.com, an online classified listing website (the "ClassifiedRide"), equal to an aggregate total of one hundred percent (100%) of the ownership interest of the ClassifiedRide asset (the "ClassifiedRide Asset"), acquired by the Company from Baker Myers, on or about January 13, 2014, and (B) a certain amount of Company's ownership interest in Autoglance LLC, a Tennessee limited liability company (the "Autoglance"), equal to an aggregate total of fifty-one percent (51%) of the units of membership interest (the "Autoglance Units"), including, but not limited to, the majority control over all owned assets of Autoglance, acquired by the Company from Baker Myers, on or about January 15, 2014.

 

The foregoing description of the Assignment are qualified in its entirety by reference to the Assignment filed as Exhibit 10.76 to this report and incorporated herein by reference.

 

 
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Definitive Agreement for the acquisition of a new subsidiary

 

On May 20, 2016, the Company and the controlling shareholders of Properties of Merit Inc., a Nevada corporation ("POM"), executed a definitive agreement (the "POM Definitive Agreement"), pursuant to which the Company agreed to acquire one hundred percent (100%) of the ownership interest in POM, in the form of three (3) separate closings beginning on or before May 27, 2016, subject to the following terms and conditions:

 

(a)  First Closing . On or before May 27, 2016 (the "First Closing" or "Initial Closing"), the Company would acquire a total of twenty percent (20%) of the ownership interest of POM in a share exchange in which the controlling shareholders of POM would assign and transfer a total of 4,000,000 shares of common stock of POM (the "POM Shares") to the Company in exchange for a total of 100,000 shares of Series B Preferred Stock of the Company (the "New DEAC Shares"), issued by the Company to the controlling shareholders of POM.

 

In addition, within two (2) business days after the Initial Closing, POM agreed to advance a total of Twenty-Five Thousand Dollars ($25,000) to the Company for the purposes of funding the completion of Company's audit and Form 10K filing with the SEC for the period ending December 31, 2015 (the "Interim Financing"), secured by an executed Convertible Redeemable Note ("POM Note"). Separately, the Company agreed to arrange for initial funding to finance the POM operations in an amount of not less than $250,000, within thirty (30) days after the Initial Closing.

 

(b)  Second Closing. On or before July 1, 2016 (the "Second Closing"), the Company would acquire an additional total of twenty percent (20%) of the ownership interest of POM in a share exchange in which the controlling shareholders of POM would assign and transfer an additional total of 4,000,000 POM Shares to the Company in exchange for an additional 100,000 New DEAC Shares, issued by the Company to the controlling shareholders of POM.

 

In addition, the the Second Closing would be contingent upon (a) the ability of POM to complete all necessary corporate actions to effect any and all outstanding matters related to POM Permits and POM Rights set forth in the Agreement, including, but not limited to audit financials on POM and any subsidiary acquired or formed by POM after the first Closing (the "Books and Records"), in form acceptable to the Company, and (b) the Company's ability to obtain additional funding to finance the POM operations in an amount of not less than $2.5M and up to $7.5M in the aggregate.

 

(c)  Third Closing . On or before October 1, 2016 (the "Third Closing"), the Company would acquire a total of sixty percent (60%) of the ownership interest of POM remaining in a share exchange in which the controlling shareholders of POM would assign and transfer a total of 12,000,000 POM Shares to the Company in exchange for a total of 19,800,000 New DEAC Shares, issued by the Company to the controlling shareholders of POM.

 

In addition, the Third Closing would be contingent upon the Company's ability to obtain additional funding to finance the POM operations in an amount of not less than $7.5M (if such total minimum amount was not secured in the Second Closing) and up to $15M in the aggregate.

 

Notwithstanding the forgoing, the Company's obligations for the financings required in all three (3) closings may be completed in the form of either debt and/or equity or joint venture financing from either (a) Company to POM as inter-company financing to an operating subsidiary, or (b) from one or more third-parties directly into POM.

 

In the event of a termination of the Definitive Agreement after the First Closing or Second Closing, the Company is required to assign and transfer any and all POM Shares held by the Company back to the controlling shareholders of POM, and POM controlling shareholders is required to assign and transfer any and all New DEAC Shares back to Company. In the event, Company has arranged and completed any of the required financings set forth in the Definitive Agreement, then POM and POM Controlling Shareholders will be required to abide by the terms of the such financings, mutually agreed to as such time, and if such financings were completed directly with Company and not by a third-party, POM and POM controlling shareholders would be responsible for the repayment of such funds advanced by Company as if Company was a third-party investor or lender. POM and POM controlling shareholder mutually agreed in advance to execute any and all necessary documents to effect such financial arrangement with Company if a termination does occur prior to the Third Closing. If no additional financings have occurred prior to the Second Closing and/or Third Closing, POM and POM Shareholders shall not have any further obligations to Company, except as otherwise provided for herein.  

 

The foregoing description of the Definitive Agreement and Note are qualified in its entirety by reference to the Definitive Agreement and Note filed as Exhibit 10.77 to this report and incorporated herein by reference.

 

 
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Termination Agreement to Equity Purchase Agreement

 

On May 24, 2016, the Company and Tarpon Bay Partners LLC ("Tarpon") executed a Termination Agreement (the "Termination Agreement"), in which the parties agreed to cancel the original Equity Purchase Agreement (the "Original Purchase Agreement"), dated July 14, 2015 (except for the original Promissory Notes (the "Original Tarpon Note") which was amended and restated as set forth below), in the original amount of USD $50,000.00, issued by the Company to Tarpon as additional compensation pursuant to Original Purchase Agreement), which gave the Company the right to issue and sell to Tarpon any of the Five Million Dollars ($5,000,000) of the Company's common stock,.

 

In exchange for the Termination Agreement, the Company agreed to:

 

(a) amend and restate the terms of the Original Tarpon Note, in the form of the issuance of an amended and restated convertible redeemable note (the "Amended Tarpon Note"), in the principal amount of $50,000.00, at ten percent (10%) interest per annum commencing on July 14, 2015 (the "Effective Date"), to be due and payable to Tarpon by Company in four (4) separate equal quarterly payments of Twelve Thousand Five Hundred Dollars (USD $12,500), plus accrued interest to date, due on the first day of each quarter beginning on July 1, 2016, convertible into shares of the Company's common stock at a conversion price equal to fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 9.99% and other terms and conditions set forth therein , and

 

(b) execute a new Equity Purchase Agreement (the "New Purchase Agreement"), pursuant to which the Company would have the right to issue and sell to Tarpon a total of Fifteen Million Dollars ($15,000,000) of the Company's common stock, under the same terms as the Original Purchase Agreement, except for no additional compensation in lieu of the Amended Tarpon Note, to be executed on such mutually agreed upon date in the future after the Company is current on all SEC filings and is relisted on the Over-the-Counter (OTC) OTCBB and OTCQB markets.

 

The foregoing description of the Termination Agreement and Amended Tarpon Note are qualified in its entirety by reference to the Termination Agreement and Amended Tarpon Note filed as Exhibit 10.78 to this report and incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation

 

The information provided in Item 1.01 is incorporated by reference in this Item 2.03.

 

Item 3.02 Unregistered Sales of Equity Securities

 

The disclosures under Item 1.01 are incorporated herein by reference. The issuance of notes to the respective parties in the forgoing agreements described more fully in Item 1.01 were conducted in reliance of 4(2) the Securities Act of 1933, as amended (the "Securities Act"), in accordance with each of the executed agreements related to the issuance of notes, respectively. The Company relied upon exemption from registration based in part on representations made by each of the parties related to such notes, respectively. To the extent that shares of common stock are issued upon conversion each of the notes, respectively, the Shares will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion of each of the notes, respectively, and any resulting issuance of shares of common stock to each of the parties thereto.

 

 
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Series B Preferred Stock

 

The disclosures under Item 1.01, 3.03 and 5.03 are incorporated herein by reference. On May 18, 2016 , the Company issued a total of 2,000,000 shares of Series B Preferred Stock to two (2) separate parties in the amount of 1,000,000 shares each to Ricketts and Antol, respectively, pursuant to the executed Ricketts Subscription Agreement and Antol Subscription Agreement . The Series B Preferred s hares were offered and sold to the parties in a private placement transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Company based such reliance on certain representations made by each of the parties to the Company including that each of the parties were accredited investor s as defined in Rule 501 of Regulation D.

 

Item 3.03 Material Modification to Rights of Security  Holders.   

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change In Fiscal Year.
On May 18, 2016, the Company filed a Certificate of Designation of Series B Convertible Preferred Stock (the "Certificate of Designation") with the Florida Secretary of State designating 100,000,000 shares of Series B Convertible Preferred Stock (the "Convertible Preferred Stock"), par value $0.0001 per share of the Company's previously authorized 250,000,000 shares of preferred stock, par value $.0001 per share (the "Preferred Stock").

 

Rank.  With respect to the distribution of assets upon liquidation, dissolution or winding up: The Convertible Preferred Stock ranks (i) senior to all "Junior Stock"; and (ii) on a parity, in all respects, with all the "Parity Stock".

 

Voting Rights.  The shares of Convertible Preferred Stock shall be voted at a ratio of 1 to 1,000 with the shares of the Company's common stock, par value $0.0001 (the "Common Stock") as a single class with respect to all matters submitted to the holders of Common Stock at any annual or special meeting of stockholders of the Company. Each holder of one or more shares of Convertible Preferred Stock shall be entitled to notice of any stockholders' meeting. Each share of Convertible Preferred Stock shall be entitled to one (1) vote. Any fractional voting rights respect to any holder of Convertible Preferred Stock shall be rounded to the nearest whole number (with one-half rounded upward to one).

 

Liquidation Preference.  In the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company, before any distribution is made to the holders of any Junior Stock (including the Common Stock), the holders of shares of Convertible Preferred Stock are entitled to be paid out of the assets of the Company an amount equal to the par value of the Convertible Preferred Stock.

 

Optional Conversion.  Each share of Convertible Preferred Stock is convertible into one thousand (1,000) fully paid and nonassessable shares of Common Stock (the "Conversion Rate"), subject to certain adjustments described below, as follows: (i) during the period commencing after the first anniversary date (the "Quarterly Conversion Period"), each Holder of Convertible Preferred Stock may elect to convert, on each March 31, June 30, September 30 and December 31 occurring during the Quarterly Conversion Period, that number of shares of Convertible Preferred Stock equal to 25% of the total number of shares of Convertible Preferred Stock initially issued to such Holder into fully paid and nonassessable shares of Common Stock; and (ii) after the Quarterly Conversion Period, each Holder may elect to convert all or any portion of its shares of Convertible Preferred Stock then outstanding into fully paid and nonassessable shares of Common Stock.

 

If the Company subdivides (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Rate in effect immediately prior to such subdivision will be proportionately reduced, as applicable. Likewise, if the Company combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior to such combination will be proportionately increased. In the event of certain issuances of Common Stock or securities convertible into or exercisable for Common Stock at a price per share or conversion price less than $1.00 up to the aggregate of Ten Million and No/100 Dollars (USD $10,000,000.00) in total paid in capital in the form of debt converted to equity or equity into the Corporation from date of this Convertible Preferred Stock designation (a "Dilutive Issuance"), the Company is required to promptly issue additional shares of Convertible Preferred Stock (the "Make Whole Shares") to the holders of the outstanding shares of Convertible Preferred Stock in an aggregate amount equal the number of shares of Convertible Preferred Stock outstanding immediately before such Dilutive Issuance multiplied by a fraction, the numerator of which is the number of shares of Common Stock and the denominator of which is the number of shares of Common Stock outstanding immediately preceding the Dilutive Issuance. Each such holder shall be entitled to receive a pro rata portion of the Make Whole Shares in proportion to the number of shares of Convertible Preferred Stock held by such Holder immediately preceding the Dilutive Issuance. Shares of Convertible Preferred Stock that are converted shall be retired and thereupon shall return to the status of authorized and unissued shares of Preferred Stock of the Company without designation as to series.

 

 
10
 

 
 

Except for the optional conversion rights described in the preceding paragraph, the Convertible Preferred Stock shall not be redeemable upon the request of holders thereof or exchangeable for other capital stock or indebtedness of the Company or other property upon the request of holders thereof. The shares of Convertible Preferred Stock shall not be subject to the operation of a purchase, retirement or sinking fund.

 

Fractional Shares . In the event of a conversion of the Convertible Preferred Stock that results in a fractional interest in a share of the Common Stock or Convertible Preferred Stock to a holder, the Company will pay such fractional interest to the holder in cash equal to the product of the fractional interest the closing bid price of a share of Common Stock on the trading day immediately preceding the date on which shares of Common Stock are issued upon conversion of a share of Convertible Preferred Stock. In the event of the issuance of Make Whole Shares that results in a fractional interest in a share of the Common Stock or Convertible Preferred Stock to a holder, the number of Make Whole Shares issuable to such holder shall be rounded to the nearest whole number (with one-half rounded upward to one).

 

Restrictive Covenants.  At any time following Issue Date and while any shares of Convertible Preferred Stock are outstanding, the Company shall obtain the consent of at least eighty percent (80%) of the holders of the issued and outstanding shares of the Convertible Preferred Stock prior to: (i) electing the members of the Board of Directors; (ii) creating or authorizing the creation of any additional series of capital stock; (iii) increasing the authorized number of shares of Preferred Stock, Common Stock, or authorized amount of any additional series of capital stock; (iv) issue any authorized securities of the Company; (v) creating or authorizing any obligations or other security convertible into shares of Preferred Stock or any other series of capital stock; (vi) amending, altering, or repealing any provision of the Articles of Incorporation or the Company's Bylaws which affects the perspective preferences, qualifications, special or relative rights or privileges of the Convertible Preferred Stock, or adversely affects the Convertible Preferred Stock (or its holders) in a manner differently or disproportionately to other series of the Company's capital stock (or the holders thereof); (vii) liquidating, dissolving or winding-up the affairs of the Company, or effect any "Fundamental Transaction" (as defined in Exhibit 3.1); (viii) effecting any statutory share exchange; or (ix) amending, altering or repealing the provisions of the Convertible Preferred Stock so as to adversely affect any right, preference, privilege or voting power of the Convertible Preferred Stock.

 

The foregoing description of the Convertible Preferred Stock is qualified in its entirety by reference to the Certificate of Designation of Series A Convertible Preferred Stock filed as Exhibit 10.79 to this report and incorporated herein by reference.

 

Item 8.01 Other Events

 

Formation of New Subsidiaries

 

On May 16, 2016, the Company filed two (2) separate Articles of Organization with the Secretary of State of the State of Florida for the formation of two (2) separate limited liability companies; (1) Elite Gaming Ventures LLC, and (2) Elite Data Marketing LLC, both wholly-owned subsidiaries of the Company (the "Subsidiaries") for purposes of effecting certain corporate actions of the Company. Separately, the Company executed two (2) separate Operating Agreements (the "Operating Agreement"), dated May 16, 2016, to set forth the operational governance of each of the Subsidiaries, including, but not limited to, the appointment of Charles Rimlinger (the Company's Chief Executive Officer) as the initial manager, and initial capital of USD$100.00 in each subsidiary.

 

The foregoing description of the Articles of Organization and Operating Agreements are qualified in its entirety by reference to the Articles of Organization and Operating Agreements filed as Exhibit 10.80 and 10.81 to this report and incorporated herein by reference.

 

Letter of Withdrawal of S-1 Registration Statement

 

On May 17, 2016, the Company filed a letter with the Securities and Exchange Commission for the withdrawal of the Form S-1 registration statement filed on September 28, 2015 due to unfavorable market conditions.

 

The foregoing description of the Letter of Withdrawal is qualified in its entirety by reference to the Letter of Withdrawal submitted.

 

 
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Item 9.01 Financials Statements and Exhibits.

 

Those exhibits marked with an asterisk (*) refer to exhibits filed herewith. The other exhibits are incorporated herein by reference, as indicated in the following list.

 

Exhibit Number

Description

10.69*

Note and Share Cancellation and Exchange Agreement dated May 18, 2016 by and between Elite Data Services, Inc. and Baker Myers & Associates, LLC, including the Option Agreement and Warrant Agreement referenced by exhibits therein.

10.70*

Sixth Amendment to the Line of Credit Agreement dated May 18, 2016 by and between Elite Data Services, Inc. and Sarah Myers, including the Amended and Restated Note referenced by exhibits therein.

10.71*

First Amendment Agreement dated May 18, 2016 by and between Elite Data Services, Inc. and Birch First Capital Fund LLC and Birch First Advisors LLC, including the Amended and Restated Redeemable Note No. 1, Warrant No. 1, Amended and Restated Redeemable Note No. 2, Warrant No. 2, and Note Assignment referenced by exhibits therein.

10.72*

Independent Contractor Agreement dated May 18, 2016 by and between Elite Data Services, Inc. and Dr. James G. Ricketts, including the Subscription Agreement, Services Agreement and Indemnification Agreement referenced by exhibits therein.

10.73*

Independent Contractor Agreement dated May 18, 2016 by and between Elite Data Services, Inc. and Stephen Antol, including the Subscription Agreement, and Indemnification Agreement referenced by exhibits therein.

10.74*

Settlement Letter dated May 18, 2016 by and between Elite Data Services, Inc. and JMS Law Group PLLC, including the Convertible Redeemable Note referenced by exhibits therein.

10.75*

Third Amendment to the Securities Purchase Agreement dated May 20, 2016 by and between Elite Data Services, Inc. and H Y H Investments, S.A., including the Joint Venture Agreement, and Amended and Restated Redeemable Note referenced by exhibits therein.

10.76*

Assignment of Ownership Interest dated May 20, 2016 by and between Elite Data Services, Inc. and Elite Data Marketing LLC.

10.77*

Definitive Agreement dated May 20, 2016 by and between Elite Data Services, Inc. and Properties of Merit Inc., including the Convertible Redeemable Note referenced by exhibits therein.

10.78*

Termination Agreement dated May 20, 2016 by and between Elite Data Services, Inc. and Tarpon Bay Partners LLC, including the Amended Tarpon Note referenced by exhibits therein.

10.79*

Certificate of D Certificate of Designation of Series B Convertible Preferred Stock dated May 17, 2016 filed with the Secretary of State of the State of Florida.

10.80*

Articles of Organization of Elite Gaming Ventures, LLC dated May 16, 2016 filed with the Secretary of State of the State of Florida, including the Operating Agreement referenced by exhibit therein.

10.81*

Articles of Organization of Elite Data Marketing, LLC dated May 16, 2016 filed with the Secretary of State of the State of Florida, including the Operating Agreement referenced by exhibit therein.

99.1*

Press Release

 

 
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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.  

 

ELITE DATA SERVICES, INC.

Dated: May 24, 2016

By:

/s/ Charles Rimlinger

Charles Rimlinger

Chief Executive Officer

 

 

 

13


EXHIBIT 10.69

 

NOTE AND SHARE CANCELLATION AND EXCHANGE AGREEMENT

 

THIS NOTE AND SHARE CANCELLATION AND EXCHANGE AGREEMENT (" Agreement ") is entered into as of this 18th day of May 2016, between ELITE DATA SERVICES INC., a Florida corporation (the "Company", also referred to herein as " Releasee "), and BAKER MYERS AND ASSOCIATES LLC, a Nevada limited liability company (" Releasor ").

 

RECITALS

 

WHEREAS, Releasee executed that certain unsecured Promissory Note on or about January 13, 2013, as amended, in favor of Releasor in the face amount of $587,500 (the " Principal Sum ") and accrued interest of $92,465 (the "Accrued Interest") as of December 31, 2015, pursuant to which Releasee promised to pay to Releasor or its registered assignees, the Principal Sum together with interest thereon in accordance with the Note;

 

WHEREAS, Releasee issued those certain shares of common stock of the Company, par value $0.0001 on or about February 12, 2014 in favor of Releasor in the total amount of Fourteen Million Three (14,000,000) shares (" Shares ");

 

WHEREAS, Releasor desires to forego and waive any and all right in, entitlement to or interest in (A) a total of $87,500 in principal, a total of $92,465 in accrued interest, late charges, reimbursable attorneys' fees, reimbursable expenses and any other sums due and payable with respect to the Note totaling $179,952 (the " Cancelled Amount ") as of the date of this Agreement (the " Effective Date "), any future payments due under the Cancelled Amount of the Note and all or any other of Releasor's rights under the Cancelled Amount of the Note, thereby extinguishing and canceling the Cancelled Amount of the Note and terminating any and all of Releasee's obligations thereunder, (B) the Shares (hereinafter also referred to as the " Cancelled Shares ") in exchange for the issuance an Option Agreement (the " Option Agreement "), attached hereto as Exhibit A, registered in the Releasor's name to purchase up to a certain number of membership interests (the " EDM Membership Interest ") of Elite Data Marketing LLC, a Florida limited liability company (the " EDM "), in an amount totaling one hundred percent (100%) of the ownership interest in EDM (the " Option 1 "), (B) the issuance by Company to Releasor of a three-year "cashless" common stock purchase warrant (the "Warrant No. BM-1") for the right to purchase a total of 3,000,000 shares of Series B Preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, with certain rights and preferences as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), in exchange for the Cancelled Shares, as referenced in the Share Exchange Agreement (the "Share Exchange"), attached hereto as Exhibit B, and (C) the issuance a amended and restated convertible redeemable note (the "Redeemable Note") in the aggregate principal face amount of Five Hundred Thousand Dollars (US$500,000), at ten percent (10%) interest per annum commencing on date of execution (the " Effective Date "), due and payable to Releasee by Company in eight (8) separate equal quarterly payments of Sixty-Two Thousand Five Hundred Dollars (USD $62,500), plus accrued interest to date, due on the first day of each quarter beginning on the date of the first quarter following the date of execution of this Note (each a " Maturity Date "), (the " Cancellation Transaction ").

 

 
1
 

  

NOW, THEREFORE, in consideration of the premises, mutual promises, representations, warranties, covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree to be legally bound as follows:

 

Section 1.  Recitals . Releasee and Releasor each acknowledges that the Recitals set forth above are true and accurate. Each of the Recitals is incorporated into this Agreement by reference and is made a part hereof.

 

Section 2.  Cancellation of Cancelled Amount; Granted Options and Issued Preferred Shares . On the terms and subject to the conditions of this Agreement, immediately upon the execution of this Agreement by all parties hereto, the Cancellation Transaction shall be deemed to be consummated in terms of the Cancelled Amount, Options and Preferred Shares. Each party hereto acknowledges receipt of the consideration set for in the Recitals above as to be received by such party.

 

Section 3.  Effects of Cancelation . Immediately upon the consummation of the Cancellation Transaction, (A) the Cancelled Amount of the Note (including all principal, interest, fees, penalties, costs, and expenses due thereon or pursuant thereto) shall be deemed paid in full and shall no longer have any legal effect. Notwithstanding anything to the contrary, the balance of the Note shall survive this Cancellation Transaction and remain in full legal effect (the "Note Balance"), and (B) the Cancelled Shares shall be deemed cancelled and void and subsequently returned to the Company's treasury.

 

Section 4.  Release . Effective upon consummation of the Cancellation Transaction, Releasor, on behalf of himself and his respective heirs and personal representatives, and all others claiming through or under them, does hereby release, acquit and forever discharge Releasee and its present and former employees, officers, directors, members, shareholders, agents, consultants, counsel or representatives, and its successors and assigns (collectively, the " Releasee Parties "), and each of them, of and from any and all obligations, claims, debts, demands, covenants, contracts, promises, agreements, liabilities, controversies, costs, expenses, attorneys' fees, actions or causes of action of any nature, whatsoever, in law or in equity, whether known or unknown, foreseen or unforeseen, accrued or not accrued, direct or indirect, which the Releasor ever had, now have, or can, shall or may have against any or all of the Releasee Parties, either alone or in combination with others, arising out of or from or in any way related to Cancelled Shares and Cancelled Amount of the Note only, and not the Note Balance.

 

Section 5.  Representations of Releasor . Releasor represents and warrants to Releasee as follows:

 

(a)  Authorization . All action on the part of Releasor, necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Releasor hereunder has been taken. This Agreement, when executed and delivered by Releasor, will constitute a valid and legally binding obligation of Releasor, enforceable against Releasor in accordance with its terms.

 

(b)  Title to Note and Shares . Releasor is the lawful owner of the Note and Shares with good and marketable title thereto free and clear of all the following of any nature whatsoever: security interests, liens, pledges, claims, charges, escrows, encumbrances, options, rights of first offer or refusal, community property rights, mortgages, indentures, security agreements or other agreements, arrangements, contracts, commitments, understandings or obligations, whether written or oral and whether or not relating in any way to credit or the borrowing of money.

 

(c)  No Conflicts; Advice . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which Releasor is subject or any provision of its organizational documents or other similar governing instruments, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which Releasor is a party. Releasor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with the transactions contemplated hereby.

 

 
2
 

 

(d)  Consents . No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body or other person is required for the valid authorization, execution, delivery and performance by Releasor of this Agreement and the consummation of the transactions contemplated hereby.  

 

(e)  Bankruptcy . Releasor is not under the jurisdiction of a court in a Title 11 or similar case (within the meaning of Bankruptcy Code Section 368(a)(3)(A) (or related provisions)) or involved in any insolvency proceeding or reorganization.

 

Section 6.  Representations of Releasee . Releasee represents and warrants to Releasor as follows:

 

(a) Authorization . All action on the part of Releasee, necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Releasee hereunder has been taken. This Agreement, when executed and delivered by Releasee, will constitute a valid and legally binding obligation of Releasee, enforceable against Releasee in accordance with its terms.

 

(b)  No Conflicts; Advice . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which Releasee is subject or any provision of its organizational documents or other similar governing instruments, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which Releasee is a party. Releasee has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with the transactions contemplated hereby.

 

(c)  Consents . No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body or other person is required for the valid authorization, execution, delivery and performance by Releasee of this Agreement and the consummation of the transactions contemplated hereby.

 

Section 7.  Waivers . No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action, or compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The waiver by any party hereto at or before the Closing Date of any condition to its obligations hereunder which is not fulfilled shall preclude such party from seeking redress from the other party hereto for breach of any representations, warranty, covenant or agreement contained in this Agreement.

 

Section 8.  Successors and Assigns . This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, and permitted assigns.

 

Section 9.  Expenses . Each party hereto shall pay the fees and expenses of such party's advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, and shall hold the other party hereto harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in connection with any claim for such fees and expenses.

 

 
3
 

 
 

Section 10.  Notices . Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally, or by electronic delivery in PDF format (followed by first-class mail), or seventy-two (72) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice.

 

If to Releasee to:

Elite Data Services, Inc. 

4447 N. Central Expressway,  

Suite 110-135  

Dallas, TX 75205  

Attn: Chief Executive Officer  

Phone: (972) 885-3981  

Email: corp@edscompanies.com   

 

 

If to the Releasor to:

Baker & Myers & Associates LLC  

522B 3rd Avenue S.  

Nashville, TN 37210  

Attn: Sarah Myers, Manager  

Phone: (615) 497-2923  

Email: Sarah-myers@live.com  

  

Section 11.  Counterparts . This Agreement may be executed via facsimile in one or more counterparts and transmitted via facsimile or PDF, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. When counterparts of copies have been executed by all parties, they shall have the same effect as if the signatures to each counterpart or copy were upon the same document and copies of such documents shall be deemed valid as originals.

 

Section 12.  Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired hereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

 
4
 

 
 

Section 13.  Entire Agreement . This Agreement represents the entire agreement of the parties hereto with respect to the matters contemplated hereby, and there are no written or oral representations, warranties, understandings or agreements with respect hereto except as expressly set forth herein.

 

Section 14.  Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by each party or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.

 

Section 15.  Confidentiality . Each of Releasor and Releasee hereby agrees, without the prior written consent of the other, to not disclose, and to otherwise keep confidential, the transactions contemplated hereby and the terms and conditions of this Agreement, except to the extent that disclosure thereof is required by law, rule or regulation; provided, however, that Releasor and Releasee may disclose information regarding such transactions to their respective accountants, attorneys, limited partners, shareholders and other interest holders.

 

Section 16.  Further Assurances . Each of Releasor and Releasee hereby agrees and provides further assurances that it will, in the future, execute and deliver any and all further agreements, certificates, instruments and documents and do and perform or cause to be done and performed, all acts and things as may be necessary or appropriate to carry out the intent and accomplish the purposes of this Agreement.

 

Section 17.  Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida. Each of the parties hereto consents to the exclusive jurisdiction and venue of the state courts located in Florida and the federal courts for the District of Florida with respect to all claims under this Agreement.  

 

[Signature Page to Follow]

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above.

 

 

RELEASOR :

 

BAKER MYERS AND ASSOCIATES LLC

a Nevada limited liability company

 

       
By: /s/ Sarah Myers

 

 

 

Sarah Myers

 

 

 

Manager

 

 

 

 

 

 

RELEASEE :

 

ELITE DATA SERVICES, INC.

a Florida corporation  

 
By: /s/ Charles Rimlinger
Charles Rimlinger
Chief Executive Officer
 

 
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EXHIBIT A

 

OPTION AGREEMENT #1

 

(Elite Data Marketing LLC)

 

THIS OPTION AGREEMENT (the "Agreement") made and entered into this 18th day of May 2016, by and between ELITE DATA SERVICES INC. ("Grantor") and BAKER & MYERS & ASSOCIATIES LLC ("Optionee").

 

WITNESSETH:

 

WHEREAS , Grantor and Optionee executed that certain Cancellation Agreement on or before May 18, 2016 (the "Cancellation Agreement"), of which this Agreement is made a part thereof, in which Grantor agreed to grant to Optionee an option to purchase certain securities from Grantor, as described in Section 2 hereinbelow.

 

WHEREAS , Grantor wishes to formally grant said option to Optionee under the terms and conditions set forth herein.

 

NOW, THEREFORE , in consideration of the mutual promises and covenants contained herein the parties agree as follows:

 

1.  RECITALS . The above recitals are true and correct and are incorporated by reference herein.

 

2.  GRANT OF OPTION. The Grantor hereby grants to Optionee an option (the "Option") to purchase a certain number of units (the "Optioned Units") of membership interest of Elite Date Marketing LLC, a Delaware limited liability company, a controlled subsidiary of the Grantor (the "Subsidiary"), representing a total of one percent (100%) of the ownership interest of the Subsidiary, in exchange for (A) the transfer and cancellation of 2,000,000 shares of Common Stock of Grantor owed and held by Optionee and the cancellation of a total of $87,500 in principal and $92,465 in interest of the total of $679,465 owed by Grantor to Optionee, and (B) the payment of the Exercise Price from Optionee, as set forth in Section 4 hereinbelow.

 

3.  TERM OF OPTION . The Option hereby granted shall be and remain in full force and effect for two (2) years from the date of execution hereof (the "Expiration Date") .

 

4. EXERCISE OF OPTION.

 

4.1 Exercise Price and Payment . Optionee shall be entitled to purchase all or any part the Optioned Units covered by the Option at an exercise price of a total of Two Hundred Thousand Dollars ($200,000) (the "Exercise Price"), payable in the form a cancellation of a portion of the Note owned and held by the Optionee, as referenced in the Cancellation Agreement, in increments of Two Thousand Dollars ($2,000) (the "Payments"), in exchange for Optioned Units equal to one percent (1%) ownership interest of the Subsidiary. Optionee shall deliver to the Grantor written confirmation each time Optionee elects to exercise the Option, in whole or part, pursuant to Section 4.2 below, referencing the amount of Optioned Units being exercised and the corresponding amount of the Note being cancelled as payment of the Exercise Price.

 

 
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4.2 Method of Exercise . This Option may be exercised by delivery of an executed written exercise notice from the Optionee (the "Exercise Notice"), which shall state the election to exercise the Option and the number of Optioned Units in respect of which the Option is being exercised (the "Exercised Units"). The Exercise Notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Grantor. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Units in accordance with Section 4.1. This Option shall be deemed to be exercised upon receipt by the Grantor of such fully executed Exercise Note accompanied by such aggregate Exercise Price (the "Option Exercise Date").

 

5. REPRESENTATIONS AND WARRANTIES OF THE GRANTOR . Grantor represents and warrants to Optionee, as of the date hereof, and as of the Option Exercise Date, as follows:

 

(a)  All actions on the part of Grantor, necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Grantor hereunder has been taken. This Agreement, when executed and delivered by Grantor, will constitute a valid and legally binding obligation of Grantor, enforceable against Grantor in accordance with its terms.

 

(b) Grantor is the lawful owner of the Optioned Units with good and marketable title thereto, and Grantor has the absolute right to sell, assign, convey, transfer and deliver the Units and any and all rights and benefits incident to the ownership thereof (including, without limitation, any registration rights pertaining to the UNits), all of which rights and benefits are transferable by Grantor to Optionee pursuant to this Agreement, free and clear of all the following (collectively called "Claims") of any nature whatsoever: security interests, liens, pledges, claims (pending or, to the Grantor's knowledge, threatened), charges, escrows, encumbrances, lock-up arrangements, options, rights of first offer or refusal, community property rights, mortgages, indentures, security agreements or other agreements, arrangements, contracts, commitments, understandings or obligations, whether written or oral and whether or not relating in any way to credit or the borrowing of money. In addition, there are no voting trusts or proxies in effect relating to the Units. The purchase and sale of the Units as contemplated herein will (i) pass good and marketable title to the Units to Optionee, free and clear of all Claims, and (ii) convey, free and clear of all Claims, any and all rights and benefits incident to the ownership of such Units (including, without limitation, any registration rights pertaining to the Units).

 

(c) Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, or court to which Grantor is subject or any provision of its organizational documents or other similar governing instruments, or conflict with, violate or constitute a default under any agreement, credit facility, debt or other instrument or understanding to which Grantor is a party.

 

(d) There is no action, suit, proceeding, judgment, claim or investigation pending, or to the knowledge of Grantor, threatened against Grantor which could reasonably be expected in any manner to challenge or seek to prevent, enjoin, alter or materially delay any of the transactions contemplated by this Agreement.

 

(e) No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body or other person is required for the valid authorization, execution, delivery and performance by Grantor of this Agreement and the consummation of the transactions contemplated hereby.

 

(f) Grantor is not under the jurisdiction of a court in a Title 11 or similar case (within the meaning of Bankruptcy Code Section 368(a)(3)(A) (or related provisions)) or involved in any insolvency proceeding or reorganization.

 

 
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6. TRANSFERABILITY OF OPTION . Neither this Option nor the Optioned Units have been registered under the Act. None of this Option, the Optioned Units or the rights and privileges conferred in whole and in part hereby, may be transferred, assigned, pledged, or hypothecated in any manner unless registered under the Act or, in the opinion of counsel satisfactory to the Company, an exemption from registration under the Act is available. Neither this Option nor the Optioned Units shall be subject to levy and execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of this Option or the Optioned Units, or any right or privilege conferred hereby, contrary to the provisions hereof, or upon levy and execution, attachment or similar process on this Option and the rights and privileges conferred under this Agreement, this Option and such rights and privileges shall immediately become null and void.

 

7.  ISSUANCE OF OPTIONED UNITS . Grantor shall be obligated to sell the Optioned Units to the Optionee upon the exercise of the Option. Each certificate representing the restricted Optioned Units shall be stamped or otherwise imprinted with a legend evidencing all applicable federal and local securities laws.

 

8.  GRANTOR'S RETENTION OF OWNERSHIP DURING OPTION PERIOD . During the term of this Option, Grantor shall not sell, assign, transfer, bequeath, or otherwise dispose of the Optioned Units, in whole or in part, and Grantor shall not pledge or hypothecate the Optioned Units or create, or permit to be created, any liens against the Optioned Units, in whole or in part. Grantor shall defend the Optioned Units against, and will take such other action as is necessary to remove, any lien or claim on or to the Optioned Units and will defend the right, title and interest of Optionee in and to any of the Optioned Units against the claims and demands of all persons whomsoever.

 

9.  ADJUSTMENTS TO MEMBERSHIP INTEREST ISSUABLE UPON EXERCISE OF OPTION.

 

9.1  An appropriate and proportionate adjustment shall be made in the maximum number and/or kind of securities allocated to this Option, without change in the aggregate purchase price applicable to the unexercised portion of the outstanding Option, but with a corresponding adjustment in the price for each unit of membership interest or other unit of any security covered by this Option upon the Grantor's issuance of such new securities in the Subsidiary ("New Securities"). New Securities shall mean any class or series of membership interest of the Subsidiary, whether now authorized or not, and rights, options or warrants to purchase said class or series of membership interest of the Subsidiary, and securities of any type whatsoever that are, or may become, convertible into common stock or preferred stock of the Company; provided, New Securities does not include (i) securities issued pursuant to any existing Company options outstanding on the date of this Agreement or Company options issued, after the date of this Agreement, pursuant to an existing options issued by the Company(ii) securities offered to the public pursuant to a registration statement; or, (iii) securities issued pursuant to the acquisition of another person by the Company, to purchase substantially all of another person's assets; or, any other reorganization whereby the Company shall own less than fifty percent (50.0%) of the voting power of the surviving entity. Except as provided for in this Section 9, if the outstanding shares of common stock of the Company or units of membership interest of the Subsidiary are increased, decreased, changed into or exchanged for a different number or kind of stock or securities of the Company or Subsidiary or stock or units of a different par value or without par value, through reorganization, recapitalization, reclassification, stock dividend, stock split; or, reverse stock split, the appropriate and proportionate adjustment shall be made hereunder.

 

 
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9.2  Upon the date (i) of the dissolution or liquidation of the Company; (ii) of a reorganization, merger or consolidation of the Company or Subsidiary with one or more persons in which the Company will not survive; (iii) of a transfer of substantially all of the assets of the Company or Subsidiary; or (iv) that a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 50% or more of the total voting equity interests of the Company, then any Option granted hereunder shall be exercisable until the effective date of such event (or such earlier date as this Option would otherwise expire hereunder) and shall terminate and be of no further force or effect on such effective date unless provision be made, in writing, in connection with such event for the assumption of this Option, or the substitution for this Option of new options covering the shares or units of any successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to number and kind of securities and prices, in which event this Option or the new options substituted therefor, shall continue in the manner and under the terms so provided. In the event of such dissolution, liquidation, reorganization, merger, consolidation, transfer of assets or change in beneficial ownership of the Company, and if provision is not made in such transaction for the assumption of this Option or the substitution for this Option of new options covering the shares of a successor entity or a parent or subsidiary thereof, then the Optionee shall be entitled, prior to the effective date of any such transaction, to purchase the full number of shares of common stock of the Company which it would otherwise have been entitled to purchase pursuant to this Option during the remaining term of such Option. Upon the first purchase of shares of stock or units of membership interest pursuant to a tender offer or exchange offer, other than by the Company, for all or any part of the stock, the Optionee shall be entitled, prior to the termination date of any such tender offer, to purchase the full number of units of membership under this Option which it otherwise would have been entitled to purchase during the remaining term of such Option.

 

9.3  Whenever an adjustment to this Option is required to be made pursuant to this Section 9, Grantor shall promptly give written notice to Optionee of such adjustments.

 

10. MISCELLANEOUS .

 

10.1  Notices . Any notice or other communication required or permitted to be given hereunder shall be in writing, and shall be deemed to have been duly given when delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the Parties hereto at their addresses indicated hereinafter. Either party may change his or its address for the purpose of this paragraph by written notice similarly given. Parties addresses are as follows:

 

GRANTOR:

 

OPTIONEE:

 

Elite Data Services Inc.

 

Baker Myers and Associates LLC

4447 N. Central Expy., Suite 110-135

 

522B 3rd Avenue South

Dallas, TX 75205

Nashville, TN 37210

Attn: Charles Rimlinger, CEO Attn: Sarah Myers, Manager
Tel: (972) 885-3981 Tel: (615) 497-2923
corp@edscompanies.com

Sarah-myers@live.com

 

10.2  Entire Agreement. This Agreement represents the entire agreement of the parties hereto with respect to the matters contemplated hereby, and there are no written or oral representations, warranties, understandings or agreements with respect hereto except as expressly set forth herein.

 

10.3  Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by each party or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action, or compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

 

 
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10.4  Captions. The captions appearing in this Agreement are inserted as a matter of convenience and for reference and in no way affect this Agreement, define, limit or describe its scope or any of its provisions.

 

10.5  Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

 

10.6  Benefits. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, and permitted assigns.

 

10.7  Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired hereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

10.8  Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration. Arbitration proceedings shall be conducted in accordance with the rules then prevailing of the American Arbitration Association or any successor. The award of the Arbitration shall be binding on the Parties. Judgment shall be entered upon an award of a majority of the arbitrators filed in a court of competent jurisdiction and confirmed by such court. Venue for Arbitration proceedings shall be Orange County, Orlando. The Parties consent that the costs of arbitration, attorneys' fees of the Parties, together with all other expenses shall be paid as provided in the Arbitration award.

 

10.9  Number of Parties. The singular shall include the plural and the plural the singular and one gender shall include all genders. As used in this Agreement the term Affiliate means a person, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under, control with, the Company.

 

10.10  Currency . In all instances, references to monies used in this Agreement shall be deemed to be United States dollars.

 

10.11  Multiple Counterparts. This Agreement may be executed via facsimile in one or more counterparts and transmitted via facsimile or PDF, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. When counterparts of copies have been executed by all parties, they shall have the same effect as if the signatures to each counterpart or copy were upon the same document and copies of such documents shall be deemed valid as originals.

 

10.12  Further Assurances . Each of the parties hereby agrees and provides further assurances that it will, in the future, execute and deliver any and all further agreements, certificates, instruments and documents and do and perform or cause to be done and performed, all acts and things as may be necessary or appropriate to carry out the intent and accomplish the purposes of this Agreement.

 

[Signature Page to Follow]

 

 
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IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day and year first written above. The parties hereto agree that facsimile signatures shall be as effective as if originals.

 

 

GRANTOR

 

ELITE DATA SERVICES INC.,

a Florida Corporation

 

       
By: /s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 

 

 

OPTIONEE

 

BAKER & MYERS & ASSOCIATES LLC,

A Nevada limited liability company

 
By:

/s/ Sarah Myers

Sarah Myers

Manager

  

 
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EXHIBIT B

 

SHARE EXCHANGE AGREEMENT

 

This SHARE EXCHANGE AGREEMENT (" Agreement ") is made as of the 18 th day of May, 2016 by and among ELITE DATA SERVICES INC., a Florida corporation (the " Company "), and BAKER MYERS AND ASSOCIATES LLC, a Nevada limited liability company (the " Seller ").

 

RECITALS

 

WHEREAS, the Company wishes to purchase from the Seller, and the Seller wish to sell to the Company, upon the terms and subject to the conditions stated in this Agreement an aggregate of 12,000,000 shares of Common Stock (as defined below); and

 

WHEREAS, in consideration of the purchase of the Common Shares (as defined below), the Company wishes to issue to the Seller a three-year "cashless" stock purchase warrant (the "Warrant No. BM-1"), attached hereto as Exhibit A-1, for the right to purchase a total of 3,000,000 shares of Series B Preferred Stock of the Company (the "Preferred Shares" or "Preferred Warrant Shares"), at a purchase price of $0.001 per share, with certain rights and preferences, as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), attached hereto as Exhibit B of the Warrant No. BM-1 (as defined below).

 

NOW THEREFORE, in consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions . For the purposes of this Agreement, the following terms shall have the meanings set forth below:

 

"Affiliate" means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common Control with, such Person.

 

"Agreement" has the meaning set forth in the Preamble .

 

"Business Day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

"Closing" has the meaning set forth in Section 3 .

 

"Closing Date" has the meaning set forth in Section 3 .

 

"Commission" means the Securities and Exchange Commission.

 

"Common Stock" means the common stock of Elite Data Services Inc. (OTC:DEAC), par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

" Common Shares" means the total number of shares of Common Stock set forth opposite Seller's name under the heading "Common Shares" on Schedule I hereto.

 

 
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"Company" has the meaning set forth in the Preamble .

 

"Control" (including the terms "controlling", "controlled by" or "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

"Losses" has the meaning set forth in Section 8(b)(ii)(A) .

 

"Material Adverse Effect" means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its subsidiaries taken as a whole, (ii) the legality or enforceability of any of the Transaction Documents or (iii) the ability of the Company to perform its obligations under the Transaction Documents.

 

"Preferred Stock" means the Series B preferred stock of Elite Data Services Inc. (OTC:DEAC), par value $0.0001 per share, with certain rights and preferences as set forth in the certificate of designation (the "Certificate of Designation of Series B Preferred), attached hereto as Exhibit B to the Warrant No. BM-1, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

" Preferred Shares" or "Preferred Warrant Shares" means the total number of shares of Preferred Stock set forth opposite Seller's name under the heading "Preferred Shares" on Schedule I hereto .

 

"Person" means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

"Piggy-Back Registration" has the meaning set forth in Section 6 .

 

"Registrable Securities" has the meaning set forth in Section 6 .

 

"Registration Statement" has the meaning set forth in Section 6 .

 

"Regulation D" has the meaning set forth in Section 5(e) .

 

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

"SEC Reports" means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act for the 12 months preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material).

 

"Securities Act" means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

"Securities" means the Common Shares or Preferred Shares.

 

 
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"Transaction Documents" means this Agreement and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated by this Agreement or in accordance with the terms and conditions of any Transaction Document .

 

2. P urchase and Sale of the Securities . Subject to the terms and conditions of this Agreement, on the Closing Date (as defined below), substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company shall purchase, and the Seller shall sell to the Company, the Common Shares in exchange for payment as specified in Section 3 below.

 

3. Closing . The completion of the transactions contemplated hereby (the "Closing") shall occur on the Business Day on which this Agreement has been executed and delivered by the applicable parties thereto and all conditions and covenants set forth in Sections 7(a) and 7(b), in each case, have been satisfied or waived (the "Closing Date"). At the Closing, (a) the Company shall deliver to the Seller the various documents set forth in Section 7(b), and (b) the Seller shall deliver to the Company the various documents set forth in Section 7(a). The Closing shall take place at such location as the Company and the Seller shall mutually agree. Promptly following the Closing, the Company shall deliver to Seller a Warrant Agreement (the "Warrant No. BM-1"), attached hereto as Exhibit A-1, executed by the Company for the right of the Seller to purchase that number of shares of Preferred Stock set forth opposite such Seller's name under the heading "Preferred Warrant Shares" on Schedule I .

 

4. Representations and Warranties of the Company . The Company hereby represents and warrants to the Seller as follows:

 

(a) Organization, Good Standing and Qualification . The Company has been duly organized and validly exists as a corporation in good standing under the laws of the State of Florida. The Company is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business require such qualification and has all corporate power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to so qualify or have such power or authority would not have, singly or in the aggregate, or could not reasonably be expected to have a Material Adverse Effect.

 

(b) Authorization . The Company has full corporate power and authority to enter into the Transaction Documents and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors' rights generally and to general equitable principles.

 

(c) Capitalization . All of the issued and outstanding shares of the Company's capital stock, including the securities of its Subsidiary, have been duly authorized and validly issued. No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company or its Subsidiary. Other than as described in the SEC Reports, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement. There are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the security holders of the Company relating to the securities of the Company or Subsidiary held by them.

 

 
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(d) Valid Issuance . The Securities have been duly and validly authorized and, when issued pursuant to the Transaction Documents, the Securities will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Seller), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. Upon the due exercise of the Option in accordance with its terms, the Option Shares will be validly issued, fully paid and non-assessable free and clear of all encumbrances and restrictions (other than those created by the Investor), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

 

(e)  Consents . The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance of the Securities require no consent of, action by or in respect of, or filing with, any governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.

 

(f) No Conflict, Breach, Violation or Default . The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company pursuant to the terms or provisions of, or result in a breach or violation of any of the terms or provisions of, or conflict with or constitute a default under, or give any party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, (i) the certificate or articles of incorporation or by-laws of the Company or certificate of organization or operating agreement of the Subsidiary, (ii) any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument to which the Company is a party or by which the Company, it Subsidiary, or any of its properties is bound or affected, or (iii) violate or conflict with any judgment, ruling, decree, order, statute, rule or regulation of any court or other governmental agency or body applicable to the business or properties of the Company, except as to (ii) and (iii) above for such breaches, violations or defaults which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

5. Representations and Warranties of the Seller . Seller hereby severally, and not jointly, represents and warrants to the Company that:

 

(a) Organization and Existence . If Seller is an entity, Seller is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership or limited liability company power and authority to invest in the Securities pursuant to this Agreement.

 

(b) Authorization . If Seller is an entity, the execution, delivery and performance by Seller of the Transaction Documents to which Seller is a party have been duly authorized and each will constitute the valid and legally binding obligation of Seller, enforceable against Seller in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors' rights generally. If Seller is a person, Seller has reached the age of 21 and has full power and authority to execute and deliver the Transaction Documents to which Seller is a party and each will constitute the valid and legally binding obligation of Seller, enforceable against Seller in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors' rights generally.

 

(c) Purchase Entirely for Own Account . The Securities to be received by Seller hereunder will be acquired for Seller's own account, not as nominee or agent, and Seller is not a broker-dealer registered with the Commission under the Exchange Act or an entity engaged in a business that would require it to be so registered. Nothing contained herein shall be deemed a representation or warranty by Seller to hold the Securities for any period of time.

 

 
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(d) Brokers and Finders . No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or any Seller for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of Seller.

 

(e) Accredited Investor . Seller is an "accredited investor" as defined in Rule 501 of Regulation D promulgated by the Commission pursuant to the Securities Act ("Regulation D") and meets the requirements of at least one of the suitability standards for an accredited investor as set forth in Rule 501 of Regulation D. Seller, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial, tax and other matters so as to be capable of evaluating the merits and risks of, and to make an informed investment decision with respect to, the prospective investment in the Securities, which represents a speculative investment, and has so evaluated the merits and risks of such investment. Seller is able to bear the economic risk of an investment in the Securities for an indefinite period and is able to afford a complete loss of such investment.

 

(f) Acknowledgement of Risk . Seller agrees, acknowledges and understands that its investment in the Securities involves a significant degree of risk, including, without limitation that: (a) the Company is a development stage business with limited operating history and may require substantial funds; (b) an investment in the Company is highly speculative and only Persons who can afford the loss of their entire investment should consider investing in the Company and the Securities; (c) the Seller may not be able to liquidate its investment; (d) transferability of the Securities is extremely limited; and (e) in the event of a disposition of the Securities, the Seller can sustain the loss of its entire investment. Seller has considered carefully and understands the risks associated with an investment in the Securities.

 

(g)  Restricted Securities . Seller understands and agrees that the Securities have not been registered under the Securities Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the Securities Act (based in part on the accuracy of the representations and warranties of the Seller contained herein), and that such Securities must be held indefinitely unless a subsequent disposition is registered under the Securities Act or any applicable state securities laws or is exempt from such registration. The Seller acknowledges that the Seller is familiar with Rule 144 and that such person has been advised that Rule 144 permits resales only under certain circumstances. The Seller understands that to the extent that Rule 144 is not available, the Seller will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement.

 

(h) Reliance on Representations . The Seller agrees, acknowledges and understands that the Company and its counsel are entitled to rely on the representations, warranties and covenants made by the Seller herein. Such Seller further represents and warrants that this Agreement and the Investor Questionnaire accompanying this Agreement in the form attached hereto as Exhibit B-1 do not contain any untrue statement or a material fact or omit any material fact concerning the Seller.

 

6. Piggy-Back Registration . If at any time on or after the date of this Agreement, the Company proposes to file a registration statement with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder (a "Registration Statement") with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or by shareholders of the Company for its own account, then the Company shall register the sale of such number of Common Stock underlying the Preferred Shares and Option Shares converted into shares of the Company (collectively, the "Registrable Securities") as the Seller may request in writing within ten (10) days following receipt of such notice (a "Piggy-Back Registration"). The Company shall cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.

 

 
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7. Closing Conditions .

 

(a) The obligation of the Company to consummate the transactions to be performed by it in connection with the Closing is subject to the following conditions being met:

 

(i) the accuracy in all material respects on the Closing Date of the representations and warranties of Seller contained herein (unless as of a specific date therein);

 

(ii) all obligations, covenants and agreements of Seller required to be performed at or prior to the Closing Date shall have been performed;

 

(iii) the delivery by Seller of a completed Investor Questionnaire in the form attached hereto as Exhibit B-1 , duly executed by such Seller;

 

(iv) the delivery by Seller of this Agreement, duly executed by such Seller; and

 

(v)  the delivery by Seller of a certificate or certificates evidencing ownership of the number of Common Shares set forth opposite such Seller's name under the heading "Common Shares" on Schedule I hereto, endorsed in blank or accompanied by duly executed stock powers in blank.

 

(b) The respective obligations of Seller to consummate the transactions to be performed by each of them in connection with the Closing are subject to the following conditions being met:

 

(i)  the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii) the delivery by the Company of this Agreement duly executed by the Company.

 

8. Miscellaneous .

 

(a) Restrictive Legend . The Securities shall bear the following or similar legend:

 

"[NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS."

 

 
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(b) Survival and Indemnification .

 

(i) Survival . The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement.

 

(ii) Indemnification .

 

(A) The Company agrees to indemnify and hold harmless Seller and its Affiliates and their respective directors, officers, trustees, members, managers, employees and agents, and their respective successors and assigns, from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, "Losses") to which such Person may become subject as a result of any breach of a material representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents and will reimburse any such Person for all such amounts as they are incurred by such Person, except if the Seller has committed gross negligence.

 

(B) Seller, individually, agrees to indemnify and hold harmless the Company and its Affiliates and their respective directors, officers, employees and agents, and their respective successors and assigns, from and against any and all Losses to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Seller under the Transaction Documents and will reimburse any such Person for all such amounts as they are incurred by such Person.

 

(c) Successors and Assigns . This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Seller, as applicable, provided, however, that a Seller may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Securities in a transaction complying with applicable securities laws without the prior written consent of the Company or the other Seller. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Without limiting the generality of the foregoing, in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Company Securities are converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term "Company" shall be deemed to refer to such Person and the term "Company Securities" shall be deemed to refer to the securities received by the Seller in connection with such transaction. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

 

(d) Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or ".pdf" signature page were an original thereof.

 

 
19
 

 

(e) Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

(f) Notices . Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days' advance written notice to the other party:

If to the Company:

 

Elite Data Services Inc.

 

4447 N. Central Expressway 

Suite 110-135  

Dallas, TX 75205  

Attn: Chief Operating Officer
Phone: (972) 885-3981
 

Email: corp@edscompanies.com

 

If to the Seller:

 

Baker Myers and Associates LLC  

522B 3rd Avenue South  

Nashville, TN 37210  

Attn: Sarah Myers  

Phone: (615) 497-2923  

Email: Sarah-myers@live.com

 

(g) Expenses . The parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys' fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

 

 
20
 

 

(h) Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Seller. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.

 

(i) Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

 

(j) Entire Agreement . This Agreement, including the Exhibits hereto, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

(k) Further Assurances . The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(l)  Governing Law; Consent to Jurisdiction; Waiver of Jury Trial . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Florida without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Florida for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

[Signature Page to Follow]

 

 
21
 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

 

COMPANY

 

 

ELITE DATA SERVICES INC.,

a Florida Corporation

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 

 

 

SELLER

 

 

BAKER & MYERS & ASSOCIATES LLC,

A Nevada limited liability company

 
By:

/s/ Sarah Myers

Sarah Myers

Manager

 

 
22
 

 

SCHEDULE I

 

Seller

 

Common
Shares 1

 

 

Preferred
Warrant Shares 2

 

 

Purchase (exchange)
Price 3

 

 

 

 

 

 

 

 

 

 

 

Total:

 

 

12,000,000

 

 

 

3,000,000

 

 

$ 43,200.00

 

 

See attached Warrant No. BM-1 Agreement.

 

 

 

 

 

____________________

1  Reflects the number of Common Shares held by such Seller prior to the Closing. 

2  Reflects the number of Preferred Shares to be delivered by the Company to the Seller in accordance with Section 3 of the Agreement. 

3  Reflects the most recent share price of $0.0036 of the Company's common stock as of date of execution.

 

 
23
 

 

Exhibit A-1

 

Warrant No. BM-1

 

WARRANT AGREEMENT

 

NEITHER THIS WARRANT NOR THE SHARES OF PREFERRED STOCK FOR WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

WARRANT TO PURCHASE SERIES B PREFERRED STOCK

 

EXERCISE PRICE: $0.001 PER SHARE

 

Warrant Certificate Number: W-BM-1

 

Number of Shares of Preferred Stock: Three Million (3,000,000) Shares

 

Date of Issuance: May 18, 2016

 

Expiration Date: May 18, 2019 at 5:00 PM, New York Time

 

ELITE DATA SERVICES, INC. (OTCBB:DEAC), a Florida corporation (the " Company "), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BAKER & MYERS & ASSOCIATES LLC , a Nevada limited liability and/or assigns, the registered holder hereof or its permitted assigns (the " Holder "), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Preferred Stock (including any Warrants to Purchase Preferred and/or Common Stock issued in exchange, transfer or replacement hereof, the " Warrant "), at any time or times on or after the Issuance Date, but not after 5:00 p.m., New York time, on May 18, 2019 (the " Expiration Date "), Three Million (3,000,000) fully paid nonassessable shares of Preferred Stock (as defined below) (the " Warrant Shares "). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 13. This Warrant is issued pursuant to that certain Note and Share Cancellation and Exchange Agreement (the " Exchange Agreement ") dated as of May 18, 2016 by and among the Company and the original Holder hereof.  

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day after the Issuance Date, in whole or in part, by delivery of a written notice, in the form attached hereto as Exhibit A (the " Exercise Notice "), of the Holder's election to exercise this Warrant. The Holder shall be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the fifth (5th) Business Day following the date on which the Company has received the Exercise Notice, the Company shall transmit an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer Agent (" Transfer Agent "). On or before the tenth (10th) Business Day following the date on which the Company has received the Exercise Notice (the " Share Delivery Date "), the Company shall issue in book position, registered in the Company's share register in the name of the Holder or its designee, for the number of shares of Preferred Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are delivered by book position confirmation evidencing such Warrant Shares, as the case may be. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section IV) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Preferred Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Preferred Stock to be issued shall be rounded down to the nearest whole number.

 

 
24
 

 

(b) Exercise Price. For purposes of this Warrant, the (" Exercise Price ") means $0.001 per share for the total amount of the Warrant Shares granted to Holder in this Warrant.

 

(c) Payment of Exercise Price . Within two (2) Trading Days of the date of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash or by wire transfer of immediately available funds. In lieu of such cash payment, the Holder may also exercise the Warrant by delivery to the Company a written note of an election to effect a cashless exercise for Warrant Shares in whole or in part, pursuant to this Section 1(c) (the "Cashless Exercise"). To the effect a Cashless Exercise, the Holder will surrender this Warrant for that number of shares of Preferred Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between (i) the then current Market Price of a share of the Preferred Stock on the date of exercise, and (ii) the Purchase Price, and the denominator of which shall be the then current Market Price per share of Preferred Stock. In the event that this Warrant is not exercised in full immediately prior to the end of the Exercise Period, this Warrant shall be deemed automatically exercised as to the remaining Warrant Shares at such time by Cashless Exercise without the delivery of any written notice from the Holder.

 

(d) Disputes . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

(e) Beneficial Ownership . The Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 4.99% (the " Maximum Percentage ") of the shares of Common Stock underlying the Preferred Stock outstanding immediately after giving effect to such exercise. The Company shall be entitled to rely on Holder's exercise notice as an indication that Holder will not, pursuant to such exercise, exceed the Maximum Percentage. For purposes of the foregoing sentence, the aggregate number of shares of Preferred Stock beneficially owned by such Person and its affiliates shall include the number of shares of Preferred Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Preferred Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Preferred Stock, the Holder may rely on the number of outstanding shares of Preferred Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Preferred Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of shares of Preferred Stock then outstanding. In any case, the number of outstanding shares of Preferred Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Preferred Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

 
25
 

 

2. REPRESENTATIONS.

 

(a) By the Holder . The Holder represents and warrants to the Company as follows:

 

(i)

It is an "accredited investor" within the meaning of Rule 501 of the Securities Act. This Warrant is acquired for the Holder's own account for investment purposes and not with a view to any offering or distribution within the meaning of the Securities Act and any applicable state securities laws. The Holder has no present intention of selling or otherwise disposing of the Warrant or the Warrant Shares in violation of such laws; and

(ii)

The Holder has sufficient knowledge and expertise in financials and business matters as to be capable of evaluating the merits and risk of its investment in the Company. The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to make this investment. The Holder understands that this investment involves a high degree of risk and could result in a substantial or complete loss of its investment. The Holder is capable of bearing the economic risks of such investment.

(iii)

This Warrant has been authorized by all necessary corporate action of the Holder and constitutes a valid and legally binding obligation of the Holder, enforceable in accordance with its terms.

(iv)

The Holder acknowledges that the Company has indicated that the Warrant and the Warrant Shares have not been registered under the Securities Act by reason of their issuance in a transaction exempt from registration requirements thereof, and that the Warrant Shares will bear a legend stating that such securities have not been registered under the Securities Act and may not be sold or transferred in the absence of such registration or an exemption from such registration.

 

(b) By the Company . The Company represents and warrants that:

 

(i)

It (A) is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization, (B) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and to consummate the transactions contemplated hereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

(ii)

The execution, delivery and performance by the Company of this Warrant (A) has been duly authorized by all necessary corporate action, (B) does not and will not contravene the Company's charter or bylaws or any other organizational document and (C) does not and will not contravene any applicable law or any contractual restriction binding on or otherwise affecting the Company or any of its properties or result in a default under any agreement or instrument to which the Company is a party or by which the Company or its properties may be subject.

(iii)

This Warrant has been duly executed and delivered by the Company, and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium and other laws affecting the rights of creditors generally and general principles of equity.

(iv)

Assuming the accuracy of the representations made by the Holder in Section 2 hereof, no authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any governmental authority is or will be necessary in connection with the execution and delivery by the Company of this Warrant, the issuance by the Company of the Warrant Shares, the consummation of the transactions contemplated hereby, the performance of or compliance with the terms and conditions hereof, or to ensure the legality, validity, and enforceability hereof.

 

 
26
 

 

(v)

The Company has reserved solely for issuance and delivery upon the exercise of this Warrant, such number of shares of Preferred Stock to provide for the exercise in full of this Warrant.

(vi)

Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration, or the filing of a prospectus qualifying the distribution, of this Warrant being issued hereby under the Securities Act or cause the issuance of this Warrant to be integrated with any prior offering of securities of the Company for purposes of the Securities Act.

 

1.

Shares to be Fully Paid. AllWarrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and non-assessable and free from all taxes, liens, claims and encumbrances.

2.

Authorization and Reservation of Shares. During the Exercise Period, the Company shall have duly authorized a sufficient number of shares of Preferred Stock, free from preemptive rights and from any other restrictions imposed by the Company without the consent of the Holder, to provide for the exercise in full of this Warrant. The Company shall at all times during the Exercise Period reserve and keep available out of such authorized but unissued shares of Preferred Stock such number of shares to provide for the exercise in full of this Warrant.

3.

Listing. In connection with the Holder's exercise of Registration Rights hereunder, the Company shall use its best efforts to promptly secure the listing of the shares of Common Stock underlying the Preferred Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Preferred Stock are then listed or become listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain such listing for so long as any other shares of Preferred Stock shall be so listed.

4.

Successors and Assigns. Except as expressly provided otherwise herein, this Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of the Company's assets.

5.

Blue Sky Laws. The Company shall, on or before the date of issuance of any Warrant Shares, take such actions as the Company shall reasonably determine are necessary to qualify the Warrant Shares for, or obtain exemption for the Warrant Shares for, sale to the Holder of this Warrant upon the exercise hereof under applicable securities or "blue sky" laws of the states of the United States; provided, however, that the Company shall not be required to qualify as a foreign corporation.

6.

Rule 144 Reports. For so long as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company agrees to use its best efforts to take all actions reasonably necessary to enable the Holder to sell the Warrant Shares without registration under the Securities Act within the limitations of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC, including filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of the Holder, the Company shall deliver to the Holder a written statement as to whether it has complied with such requirements.

 

 
27
 

 

3. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

 

(a)  Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

(b) Transfer of Warrant . This Warrant may be transferred only upon the written consent of the Company, which may be withheld in its sole discretion. No such consent shall be required upon the transfer of this Warrant under the laws of Descent. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant, registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(c) Lost, Stolen or Mutilated Warrant . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(d)  Exchangeable for Multiple Warrants . This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Preferred Stock shall be given.

 

(e) Issuance of New Warrants . Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant, the Warrant Shares designated by the Holder which, when added to the number of shares of Preferred Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

 
28
 

 

4. NOTICES.

 

Any notice, statement or demand authorized by this Warrant Agreement or made by the Warrant Agent or by the holder of any Warrant to or on the Corporation shall be both (1) emailed to the Company as set forth herein , and ( 2) delivered by hand or sent by registered or certified mail or overnight courier service addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Elite Data Services Inc.   

4447 N. Central Expressway   

Suite 110-135  

Dallas, TX 75205   

Attn: Chief Operating Officer

Phone: (972) 885-3981  

Email: corp@edscompanies.com

 

Any notice, statement, or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Corporation to or on the Warrant Agent shall be delivered by hand or sent be registered certified mail or overnight courier service, addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Baker Myers and Associates LLC  

522B 3 rd Avenue South  

Nashville, TN 37210  

Attn: Sarah Myers  

Phone: (615) 497-2923  

Email: Sarah-myers@live.com

 

5. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

6. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida.

 

7. FORUM SELECTION CLAUSE . Any dispute arising under or in connection with the Warrant or related to the terms of this Agreement shall be subject to the exclusive jurisdiction of the state of Florida located in Orlando, Florida, and any dispute between the parties shall come within the jurisdiction of the court in Orange County, Florida.

 

 
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8. CONSTRUCTION; HEADINGS . This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

9.  DISPUTE RESOLUTION . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

10. REMEDIES, OTHER OBLIGATIONS, BREACHES, AND INJUNCTIVE RELIEF . The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

 

11. TRANSFER . This Warrant may not be offered for sale, sold, transferred or assigned without the written consent of the Company, which may be withheld in its sole discretion, and only in compliance with applicable Federal and State securities laws.

 

12. WARRANT AGENT . The Company shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register in addition to sending an email to the address set forth in Section 4 hereinaboveor to such other email address as provided by the Company.

 

13. CERTAIN DEFINITIONS . For purposes of this Warrant, the following terms shall have the following meanings:

 

"Bloomberg" means Bloomberg Financial Markets.

 

"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

 
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"Closing Bid Price" means, for any security as of any date, the last closing bid price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price, as the case may be, then the last bid price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

"Common Stock" means (i) the Company's shares of Common Stock, par value $0.0001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

"Eligible Market" means the Principal Market, The New York Stock Exchange, Inc., or The NASDAQ Capital Market.

 

"Fundamental Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock and Preferred Stock (not including any shares of of Common Stock and Preferred Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of of Common Stock and Preferred Stock (not including any shares of Common Stock and Preferred Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its of Common Stock and Preferred Stock, or (vi) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Preferred Stock.

 

"Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose Preferred stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

 
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"Preferred Stock" means (i) the Company's shares of Series B Preferred Stock, par value $0.0001 per share, (ii) any share capital into which such Preferred Stock shall have been changed or any share capital resulting from a reclassification of such Preferred Stock, (ii) convertible into a certain number shares of Common Stock, other rights and provisions as set forth in the Company's Certificate of Designation of Series B Preferred Stock, attached hereto as Exhibit B.  

 

"Principal Market" means The OTC Bulletin Board.

 

"Registration Statement" means a registration statement on Form S-1, Form S-3, or such other eligible registration form as determined in the sole discretion of the Company, which registers the resale of the Warrant Shares pursuant to Rule 415 promulgated under the Securities Act.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Successor Entity" means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

"Trading Day" means any day on which the Common Stock underlying the Preferred Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Preferred Stock, then on the principal securities exchange or securities market on which the Preferred Stock are then traded; provided that "Trading Day" shall not include any day on which the Preferred Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Preferred Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 5:00 p.m., New York time).

 

[Signature Page to Follow]

 

 
32
 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Preferred Stock to be duly executed as of the Issuance Date set out above.

 

 

ELITE DATA SERVICES INC.,  

a Florida Corporation

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger,

 

 

 

Chief Executive Officer

 

 

 
33
 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

 

WARRANT TO PURCHASE COMMON STOCK

 

ELITE DATA SERVICES, INC.

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (" Warrant Shares ") of Elite Data Services Inc., a Florida corporation (the " Company "), evidenced by the attached Warrant to Purchase Common Stock (the " Warrant "). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Payment of Exercise Price . The holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

2. Delivery of Warrant Shares . The Company shall deliver to the Holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

3. Confirmation . Please send confirmation of receipt of this Exercise Notice to the following facsimile number: ______________________ or email address: ____________________.

 

Date: _______________ __, ______

 

_____________________________

Name of Registered Holder

 

By:  __________________________

 

Name: ________________________

 

Title: _________________________

 

 
34
 

 

EXHIBIT B

 

CERTIFICATE OF DESIGNATION OF SERIES B PREFERRED STOCK

 

See Attached.

 

 

 

 

 

 
35
 

 


Exhibit B-1

 

Investor Questionnaire

 

See attached.

 

 

 

 

 

 
36
 

 

EXHIBIT C

 

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE
 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT").

 

US $500,000.00

 

ELITE DATA SERVICES, INC.

 

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of BAKER MYERS AND ASSOCIATES LLC, a Nevada limited liability company and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of FIVE HUNDRED THOUSAND DOLLARS (US $500,000.00), at ten percent (10%) interest per annum commencing on January 13, 2013, the execution date of the Original Note (the " Effective Date "), due and payable to Holder by Company in eight (8) separate equal quarterly payments of Sixty-Two Thousand Five Hundred Dollars (USD $62,500.00), plus accrued interest to date, due on the first day of each quarter beginning on the date of the first quarter following the date of execution of this Note (each a " Maturity Date "), pursuant to the terms of Note and Share Cancellation and Exchange Agreement dated even date herewith between Company and Holder, of which this Note is made apart. The Company will pay interest payment and the outstanding principal due upon this Note at the sixth month anniversary and continuing until the Maturity Date. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 3(f) herein.

 

This Note is subject to the following additional provisions:

 

1. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

2. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act "), and applicable state securities laws. Holder shall provide the Company with 3-day written notice of the Note's transfer and shall presume that any attempted transfer to a party is deemed qualified by the Holder. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 3(a) hereof, in addition to the requirements set forth in Section 3(b) and 3(c), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

 
37
 

 

3. Note Conversions; Interest Payments; Prepayments, Transfers, Etc .

 

(a) The Holder of this Note is entitled, at its option, beginning on the 181th day after Effective Date, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") at a price (" Conversion Price ") for each share of Common Stock equal to the lesser of $0.01 or a discount of fifty-eight percent (58%) of the lowest trading price of the Common Stock as reported on the OTCQB market place which the Company's shares are traded or any market upon which the Common Stock may be traded in the future (" Exchange "), for the ten (10) prior trading days including the day upon which a Notice of Conversion is received by the Company and its transfer agent (provided such Notice of Conversion is delivered by electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price) beginning on the 181th day after Effective Date.

 

(b) If the shares have not been delivered within three (3) business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the transfer agent of the Company delivering the shares of Common Stock to the Holder within three (3) business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share . To the extent the Conversion Price of the Company's Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this decrease .

 

(c) At any time or times on or after the Maturity Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the following, the Holder shall not be limited to aggregate conversions of 4.99% ("Conversion Limitation 1"). The Holder shall have the authority to determine whether the restriction contained in this Section 3(c) will limit any conversion hereunder. The Holder may waive the conversion limitation described in this Section 3(c) , in whole or in part, upon and effective after 61-days prior written notice to the Company to increase such percentage to up to 9.99% ("Conversion Limitation 2").

 

(d) The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share except in the event that rounding up would violate the conversion limitation set forth in section 3(c) above.

 

 
38
 

 

(e) If the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (" Convertible Securities "), other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold (collectively, the " Common Stock Equivalents ") and the aggregate of the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the " Aggregate Per Common Share Price ") shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be reduced to the lower of: (i) the Conversion Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per Common Share Price (whether or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable in whole or in part) as of the earlier of (A) the date on which the Company shall enter into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion Price shall be made under this Section 6 upon the issuance of any Convertible Security which is outstanding on the day immediately preceding the Issuance Date. No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

 

(f) Interest on any unpaid principal balance of this Note shall be paid at the rate of ten percent (10%) per annum with the first payment being made on the sixth-month anniversary of this Note. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time after six months, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 3(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(g) The Notes may be prepaid, in whole or in part, with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at 120% of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but less than 150 days after the issuance date, then at 130% of the face amount plus any accrued interest; (iii) if the note is prepaid within 150 days after the issuance date but less than 180 days after the issuance date, then at 140% of the face amount plus any accrued interest. This Note may not be prepaid after the 180th day without written permission from Holder. Such redemption must be closed and funded within three (3) days of giving notice of redemption of the right to redeem shall be null and void.

 

(h) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

 
39
 

 

(i) In case of any Sale Event (not to include a sale of all or substantially all of the Company's assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

4. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 

 

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

 

8. If one or more of the following described "Events of Default" shall occur:

 

(a) The Company shall default in the payment of principal or interest on this Note to the Holder by the Company as of the Maturity Date; or

 

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note under which this note was issued shall be false or misleading in any respect; or

 

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

 

(d) The Company shall (1) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (2) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (3) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

 
40
 

 

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

 

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder with the exception of the current litigation that is already disclosed as reported on the Company's public filings; or

 

(h) The Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than ten (10) consecutive days;

 

(i) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within three (3) business days of its receipt of a Notice of Conversion (provided that a reasonable attorney opinion has been provided by Holder to the Company in which it deems it can reasonably rely); or

 

(j) The Company shall not be "current" in its filings with the Securities and Exchange Commission, and such shall not be cured within ten (10) business days; or

 

(k) The Company shall lose the "bid" price for its stock and a market (including the OTCBB marketplace or other exchange)

 

Then, or at any time thereafter, unless cured within five (5) business days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(i) the penalty shall be $50 per day the shares are not issued beginning on the 5th day after the conversion notice was delivered to the Company. This penalty shall increase to $100 per day beginning on the 10th day. The penalty for a breach of Section 8(k) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(h), the outstanding principal due under this Note shall increase by 50%. Further, if a breach of Section 8(m) occurs or is continuing after the 6-month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period (after cure period) as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.001 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by ten percent (10%).

 

 
41
 

 

9. At the Holder's election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice and documentary evidence indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows: Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]. Such failure to deliver will be repayable in the Company's Common Stock.

 

10.  In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

11. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

12. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a "shell issuer.

 

13. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

 

14. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

15.  Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto may be settled by binding arbitration pursuant. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association (" AAA "). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this note.

 

16. This Note shall be governed by and construed in accordance with the laws of Florida applicable to contracts made and wholly to be performed within the State of Florida and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of Florida. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

 
42
 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized on the date referenced below.

 

 

ELITE DATA SERVICES INC.,

a Florida Corporation

 

       

Date: May 18, 2016

By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
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EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Elite Data Services, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

Date of Conversion:________________________________________________________________

 

Applicable Conversion Price: _________________________________________________________

 

Signature: _______________________________________________________________________

                 [Print Name of Holder and Title of Signer]

 

Address: ________________________________________________________________________

 

                 ________________________________________________________________________

 

SSN or EIN: _______________________________

 

Shares are to be registered in the following name:__________________________________________

 

Name:  __________________________________________________________________________

 

Address: ________________________________________________________________________

 

Tel: ______________________________________

 

Fax: ______________________________________

 

SSN or EIN: ________________________________

 

Shares are to be sent or delivered to the following account:

 

Account Name: ___________________________________________________________________

 

Address: ________________________________________________________________________

 

 

44


 

EXHIBIT 10.70

 

SIXTH AMENDMENT TO LINE OF CREDIT AGREEMENT

 

This SIXTH AMENDMENT TO LINE OF CREDIT AGREEMENT (the "Sixth Amendment") dated this 18th day of May 2016 (the "Effective Date"), is made and entered into by and between ELITE DATA SERVICES INC., a Florida corporation (the "Company") and SARAH MYERS, an individual and/or assigns (the "Lender").

 

RECITALS

 

WHEREAS, the Company and the Lender entered into that certain Revolving Line of Credit Agreement (the "Original LOC Agreement") dated September 1, 2013, as amended, for the purposes of providing Company with working capital, as needed from time to time, as set forth in the executed Promissory Note (the "Original Note") dated on even date therewith;

 

WHEREAS, the Original LOC Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Forth Amendment, the Fifth Amendment, and the Original Note are collectively hereinafter referred to as (the "Orginal Agreements"); and

 

WHEREAS, the parties wish to further clarify and amend and restate certain provisions of the Original Agreements as set forth herein;

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing, the parties hereby agree as follows:

 

1. Defined Terms . Unless otherwise indicated herein, all terms, which are capitalized, but are not otherwise defined herein, shall have the meaning ascribed to them in the Original Agreements.

 

2. Cancellation of Original LOC Agreement . The Company and Lender mutually agree cancel and otherwise terminate the effectiveness of the Original LOC Agreement, whereby Lender will no longer extend any funds to the Company, pursuant to the terms of the Original Agreements.

 

3. Amended and Restated Note . The Company and Lender mutually agree to further amend and restate the Original Note (the "Amended and Restated Note"), in the form attached hereto as Exhibit A, in the total amount of $175,000.00, due and payable on the terms and condition set forth therein.

 

4. Ratifications; Inconsistent Provisions . Except as otherwise expressly provided herein, the Original Agreements, are, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Effective Date: (i) all references in the Original Agreements to "this Agreement", "hereto", "hereof", "hereunder" or words of like import referring to the Original Agreements shall mean the Original Agreements as amended by this Amendment and (ii) all references such as "thereto", "thereof", "thereunder" or words of like import referring to the Original Agreements shall mean the Original Agreements as amended by this Amendment. Notwithstanding the foregoing to the contrary, to the extent that there is any inconsistency between the provisions of the Original Agreements, and this Amendment, the provisions of this Amendment shall control and be binding.

 

5. Counterparts . This Amendment may be executed in any number of counterparts, all of which will constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Facsimile or other electronic transmission of any signed original document shall be deemed the same as delivery of an original.

 

 
1
 

 

IN WITNESS WHEREOF , the parties have executed this Amendment as of the date first above written.

 

COMPANY

 

ELITE DATA SERVICES, INC.

 

By:

/s/ Charles Rimlinger

 

Charles Rimlinger

Chief Executive Officer

 

 

LENDER

 

 

By:

/s/ Sarah Myers

 

Sarah Myers

Individually

 

 
2
 

 

EXHIBIT A

 

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE
(Line of Credit – Sarah Myers)

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT").

 

US $175,000.00

 

ELITE DATA SERVICES, INC.  

CONVERTIBLE REDEEMABLE NOTE

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of SARAH MYERS and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS (U.S. $175,000.00), at ten percent (10%) interest per annum commencing on January 1, 2016 (the " Effective Date "), due and payable to Holder by Company in seven (7) separate equal quarterly payments of Twenty-Fifty Thousand Dollars (USD $25,000), plus accrued interest to date, due on the first day of each quarter beginning on the date of the first quarter following the date of execution of this Note (each a " Maturity Date "), pursuant to the terms of the First Amendment to Line of Credit Agreement dated even date herewith between Company and Holder, of which this Note is made apart. The Company will pay interest payment and the outstanding principal due upon this Note at the sixth month anniversary and continuing until the Maturity Date. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 3(f) herein.

 

This Note is subject to the following additional provisions:

 

1. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

2. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act "), and applicable state securities laws. Holder shall provide the Company with 3-day written notice of the Note's transfer and shall presume that any attempted transfer to a party is deemed qualified by the Holder. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 3(a) hereof, in addition to the requirements set forth in Section 3(b) and 3(c), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

 
3
 

 

3. Note Conversions; Interest Payments; Prepayments, Transfers, Etc .

 

(a) The Holder of this Note is entitled, at its option, beginning on the 181th day after Effective Date, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") at a price (" Conversion Price ") for each share of Common Stock equal to a discount of fifty-eight percent (58%) of the lowest trading price of the Common Stock as reported on the OTCQB marketplace which the Company's shares are traded or any market upon which the Common Stock may be traded in the future (" Exchange "), for the ten (10) prior trading days including the day upon which a Notice of Conversion is received by the Company and its transfer agent (provided such Notice of Conversion is delivered by electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price) beginning on the 181th day after Effective Date.

 

(b) If the shares have not been delivered within three (3) business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the transfer agent of the Company delivering the shares of Common Stock to the Holder within three (3) business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share . To the extent the Conversion Price of the Company's Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this decrease .

 

(c) At any time or times on or after the Maturity Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the following, the Holder shall not be limited to aggregate conversions of 4.99% ("Conversion Limitation 1"). The Holder shall have the authority to determine whether the restriction contained in this Section 3(c) will limit any conversion hereunder. The Holder may waive the conversion limitation described in this Section 3(c) , in whole or in part, upon and effective after 61-days prior written notice to the Company to increase such percentage to up to 9.99% ("Conversion Limitation 2").

 

(d) The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share except in the event that rounding up would violate the conversion limitation set forth in section 3(c) above.

 

 
4
 

 

(e) If the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (" Convertible Securities "), other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold (collectively, the " Common Stock Equivalents ") and the aggregate of the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the " Aggregate Per Common Share Price ") shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be reduced to the lower of: (i) the Conversion Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per Common Share Price (whether or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable in whole or in part) as of the earlier of (A) the date on which the Company shall enter into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion Price shall be made under this Section 6 upon the issuance of any Convertible Security which is outstanding on the day immediately preceding the Issuance Date. No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

 

(f) Interest on any unpaid principal balance of this Note shall be paid at the rate of ten percent (10%) per annum with the first payment being made on the sixth-month anniversary of this Note. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time after six months, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 3(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(g) The Notes may be prepaid, in whole or in part, with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at 120% of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but less than 150 days after the issuance date, then at 130% of the face amount plus any accrued interest; (iii) if the note is prepaid within 150 days after the issuance date but less than 180 days after the issuance date, then at 140% of the face amount plus any accrued interest. This Note may not be prepaid after the 180th day without written permission from Holder. Such redemption must be closed and funded within three (3) days of giving notice of redemption of the right to redeem shall be null and void.

 

(h) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

 
5
 

 

(i) In case of any Sale Event (not to include a sale of all or substantially all of the Company's assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

4. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 

 

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

 

8.  If one or more of the following described "Events of Default" shall occur:

 

(a) The Company shall default in the payment of principal or interest on this Note to the Holder by the Company as of the Maturity Date; or

 

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note under which this note was issued shall be false or misleading in any respect; or

 

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

 

(d) The Company shall (1) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (2) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (3) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

 
6
 

 

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

 

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder with the exception of the current litigation that is already disclosed as reported on the Company's public filings; or

 

(h)  The Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than ten (10) consecutive days;

 

(i) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within three (3) business days of its receipt of a Notice of Conversion (provided that a reasonable attorney opinion has been provided by Holder to the Company in which it deems it can reasonably rely); or

 

(j) The Company shall not be "current" in its filings with the Securities and Exchange Commission, and such shall not be cured within ten (10) business days; or

 

(k) The Company shall lose the "bid" price for its stock and a market (including the OTCBB marketplace or other exchange)

 

Then, or at any time thereafter, unless cured within five (5) business days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(i) the penalty shall be $50 per day the shares are not issued beginning on the 5th day after the conversion notice was delivered to the Company. This penalty shall increase to $100 per day beginning on the 10th day. The penalty for a breach of Section 8(k) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(h), the outstanding principal due under this Note shall increase by 50%. Further, if a breach of Section 8(m) occurs or is continuing after the 6-month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period (after cure period) as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.001 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by ten percent (10%).

 

 
7
 

 

9. At the Holder's election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice and documentary evidence indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows: Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]. Such failure to deliver will be repayable in the Company's Common Stock.

 

10. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

11. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

12. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a "shell issuer.

 

13. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

 

14. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

15. Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto may be settled by binding arbitration pursuant. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association (" AAA "). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this note.

 

16. This Note shall be governed by and construed in accordance with the laws of Florida applicable to contracts made and wholly to be performed within the State of Florida and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of Florida. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

 
8
 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized on the date referenced below.

 

 

ELITE DATA SERVICES, INC.

 

       

Date: May 18, 2016

By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
9
 

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Elite Data Services, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

Date of Conversion: __________________________________________________________________

 

Applicable Conversion Price: ___________________________________________________________

 

Signature:__________________________________________________________________________

                               [Print Name of Holder and Title of Signer]

 

Address: __________________________________________________________________________

 

                 __________________________________________________________________________

 

SSN or EIN: ___________________________________

 

Shares are to be registered in the following name: ____________________________________________

 

Name:_____________________________________________________________________________

 

Address: __________________________________________________________________________

 

Tel:  _____________________________________

 

Fax: _____________________________________

 

SSN or EIN: _______________________________

 

Shares are to be sent or delivered to the following account:

 

Account Name:  _____________________________________________________________________

 

Address: __________________________________________________________________________

 

 

10


EXHIBIT 10.71

 

FIRST AMENDMENT TO SETTLEMENT AGREEMENT AND STIPULATION

 

This FIRST AMENDMENT TO THE SETTLEMENT AGREEMENT AND STIPULATION (the "First Amendment") is entered into as of May 18, 2016 (the "Effective Date") by and between ELITE DATA SERVICES INC. f/k/a Dynamic Energy Alliance Corp. ("Company"), a Florida corporation, on the one hand, and BIRCH FIRST CAPITAL FUND, LLC ("Birch First Capital"), a Delaware limited liability company and BIRCH FIRST ADVISORS, LLC ("Birch Advisors"), a Delaware limited liability company (together with Birch First Capital, "Birch First"), on the other hand. Company, Birch First Capital, and Birch Advisors are each referred to herein collectively as a "Party" and collectively, the "Parties."

 

RECITALS

 

WHEREAS, on July 23, 2015, the Company and Birch First Capital and Birch Advisors executed a Settlement and Stipulation Agreement (the "Settlement Agreement"), pursuant to which the parties agreed to fully resolve and dismiss, with no liability admitted or deemed to be admitted by any party, any and all claims that have been, or could have been, raised in the outstanding litigation between the parties (the "Litigation"), as more specifically detailed in the Settlement Agreement.

 

WHEREAS, on July 23, 2015, pursuant to the terms and conditions of the Settlement Agreement, the Company executed an amended and restated convertible debenture (the "Amended and Restated Note") in the principal amount of $300,000 bearing two percent (2%) interest per annum for a period of two years for the benefit of Birch First Capital. Pursuant to the terms of the Amended and Restated Note, $75,000 of the principal balance would be immediately converted into shares of common stock of the Company at $0.10 per share for a total of 750,000 shares of the Company's Common Stock. The remaining $225,000 in principal and interest of the Amended and Restated Note convertible on a quarterly basis in the amount of $37,500 into shares of the Company's Common Stock at a share price equal to the lesser of $0.10 per share, or fifty percent (50%) of the three (3) lowest intraday trading average for the twenty (20) day trading period prior to each conversion date, until paid in full, with accrued and unpaid interested due and payable in the final payment, under certain terms and conditions set forth in the Amended and Restated Note;

 

WHEREAS, on July 23, 2015, pursuant to the terms and conditions of the Settlement Agreement referenced herein, the Company, executed a new Consulting and Advisory Agreement (the "Consulting Agreement") with Birch Advisors (also herein referred to as the "Consultant") for a period of twenty-four (24) months to commence upon the execution date of the signed Agreement, payable in the form of a convertible debenture ("New Note") in the amount of $300,000 at two percent (2%) interest per annum for a period of two years. Pursuant to the Agreement, Consultant shall be paid $37,500 each quarter in the form of a reduction of the outstanding principal balance of the New Note, convertible into shares of the Company's Common Stock at a share price equal to the lesser of $0.10 per share or a twenty-five (25%) discount of the three (3) lowest intraday trading average for the twenty (20) day trading period prior to each conversion date, until paid in full, with accrued and unpaid interested due and payable in the final payment.

 

The Consultant agreed to perform advisory and consultation services to the Company, including, but not limited to, assisting Company's management with general corporate operations, business development strategies, marketing and business plans, SEC compliance and advising the Company on other ad-hoc matters as appropriate. Pursuant to the terms of the Agreement, the Company had the right to terminate the Agreement for Cause at any time upon sixty (60) days written notice to the Consultant. The Consultant had the right to terminate this Agreement if Company fails to comply with any of the material terms of this Agreement, including without limitation its responsibilities for payment of fees as set forth in this Agreement. The parties agreed that either the Company or Consultant had the right to request a quarterly review by a designated third party reviewer, whom shall determine if the Company has the right to terminate the Agreement earlier for non-performance by the Consultant. The Agreement also contained other customary and standard provisions.

 

 
1
 

 

WHEREAS, no debt conversions or stock issuances, pursuant to the terms of Amended and Restated Note or the New Note, were requested or completed by Birch First Capital or Birch Advisors, respectively, as of the date of this First Amendment; and

 

WHEREAS, the Company, Birch First Capital and Birch Advisors wish to further amend and restate certain provisions of the Settlement Agreement, including, but not limited to, the terms and conditions of the executed Amended and Restated Note, Consulting Agreement and New Note (collectively the "Original Agreements"), as set forth herein;

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing, the parties hereby agree as follows:

 

1. Defined Terms . Unless otherwise indicated herein, all terms, which are capitalized, but are not otherwise defined herein, shall have the meaning ascribed to them in the Original Agreements.

 

2. Amended and Restated Original Note and New Note and Consulting Agreement . Section 2 of the Settlement Agreement is hereby amended to reflect the following:

 

(a) Section 2.1 of the Settlement Agreement is amended as follows:

 

2.1.1

"Company and Birch First Capital shall execute an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No.1") in the principal amount of USD $400,000, on the terms and conditions substantially in the form annexed hereto as Exhibit A, which shall amend and restate the original terms set forth in the original Amended and Restated Note executed on or about July 23, 2015."

2.1.2

Company shall issue to Birch First Capital a three-year "cashless" stock purchase warrant (the "Warrant No.1") for the right to purchase a total of 4,000,000 shares of Series B preferred Stock of the Company (the "Preferred Warrant Shares"), at a purchase price of $0.001 per share, on the terms and conditions substantially in the form annexed hereto as Exhibit B.

 

(b) Section 2.2 of the Settlement agreement is amended as follows:

 

2.2.1

"Company and Birch Advisors shall execute an Amended and Restated Convertible Redeemable Note (the "Amended and Restated Redeemable Note No.2") in the principal amount of USD $300,000, on the terms and conditions substantially in the form annexed hereto as Exhibit C, which shall amend and restate the original terms set forth in the original New Note executed on or about July 23, 2015."

2.2.2

"Company and Birch Advisors shall execute an Amended and Restated Consulting Agreement (the "Amended and Restated Consulting Agreement") on the terms and conditions substantially in the form annexed hereto as Exhibit D, including, but not limited to, for a period of twenty-four (24) months, with consideration payable to Birch Advisors and/or its assigns in cash in the amount of Ten Thousand Dollars ($10,000.00) per month, including, any and all payments set forth Amended and Restated Redeemable Note No.2, and the issuance by the Company to Birch First Advisors and/or assigns a three-year "cashless" stock purchase warrant (the "Warrant No.2") for the right to purchase up to 1,000,000 shares of common stock of the Company (the "Common Warrant Shares") each month a strike price of $0.001 per share (the "Exercise Price"), on the terms and conditions substantially in the form annexed hereto as Exhibit E.

 

 
2
 

 

3. Settlement . Section 3 of the Settlement Agreement shall be amended to reflect the following:

 

"Following the execution of the First Amendment, the dismissal of the original claims set forth in executed Stipulation of Dismissal with Prejudice as defined in the Settlement Agreement shall remain in full effect and enforceable pursuant to the terms therein, except insofar as such terms are hereby amended and restated pursuant to Paragraph 2 of this First Amendment, as further reflected in the executed Amended and Restated Redeemable Note No.1, Warrant No.1, Amended and Restated Consulting Agreement, Amended and Restated Redeemable Note No.2, and Warrant No.2 therein ."

 

4. Conversions . Section 3 of the Settlement Agreement shall be amended to reflect the following:

 

"Following the execution of the First Amendment, any and all terms and conditions related conversions of the original Amended and Restated Note issued to Birch First Capital and the New Note issued to Birch First Advisors shall be amended and restated with the terms of conversions as set forth in the Amended and Restated Redeemable Note No.1 and Amended and Restated Redeemable Note No.2, more fully described in this First Amendment and referenced by exhibits herein.

 

5. Assignment. As further inducement for the execution of this First Amendment, Company has agreed to the execution of the Assignment of Amended and Restated Redeemable Note No.2 (the "Note Assignment") between Birch Advisors and Birch First Capital, on the terms and conditions substantially in the form annexed hereto as Exhibit F.

 

6. Ratifications; Inconsistent Provisions . Except as otherwise expressly provided herein, the Original Agreements, are, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Effective Date: (i) all references in the Original Agreements to "this Agreement", "hereto", "hereof", "hereunder" or words of like import referring to the Original Agreements shall mean the Original Agreements as amended by this Amendment and (ii) all references such as "thereto", "thereof", "thereunder" or words of like import referring to the Original Agreements shall mean the Original Agreements as amended by this Amendment. Notwithstanding the foregoing to the contrary, to the extent that there is any inconsistency between the provisions of the Original Agreements, and this Amendment, the provisions of this Amendment shall control and be binding.

 

7. Counterparts . This Amendment may be executed in any number of counterparts, all of which will constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Facsimile or other electronic transmission of any signed original document shall be deemed the same as delivery of an original.  

 

[Signature Page to Follow on Next Page]

 

 
3
 

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.

 

COMPANY

 

ELITE DATA SERVICES, INC.

By:

/s/ Charles Rimlinger

 
Name:

Charles Rimlinger

Title:

Chief Executive Officer

 

BIRCH FIRST CAPITAL

 

BIRCH FIRST CAPITAL FUND LLC.

By:

Birch First Capital Management LLC

Its:

Manager

 

By:

/s/ Pier S. Bjorklund

 

Pier S. Bjorklund

Managing Director

 

And,

 

BIRCH FIRST ADVISORS

 

BIRCH FIRST ADVISORS LLC.

 

By:

/s/ Pier S. Bjorklund

 

Pier S. Bjorklund

Managing Director

 

 
4
 

 

EXHIBIT A

 

AMENDED AND RESTATED REDEEMABLE NOTE NO.1

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT")

 

US $400,000.00

 

ELITE DATA SERVICES, INC.

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE NO. 1

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of BIRCH FIRST CAPITAL FUND LLC , a Delaware limited liability company and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of FOUR HUNDRED THOUSAND DOLLARS (U.S. $400,000.00) on July 23, 2017 (" Maturity Date ") and to pay interest on the principal amount outstanding hereunder at the rate of ten percent (10%) per annum commencing on July 23, 2015 (the " Effective Date "), the original date of issuance of the Original Amended and Restated Note, pursuant to the terms of the Original Settlement Agreement dated on or about July 23, 2015 and the First Amendment to the Original Agreement dated even date herewith between Company and Holder, of which this Note is made apart of. The Company will pay interest payment and the outstanding principal due upon this Note at the sixth month anniversary and continuing until the Maturity Date. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 3(f) herein.

 

This Note is subject to the following additional provisions:

 

1. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

2. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act "), and applicable state securities laws. Holder shall provide the Company with 3-day written notice of the Note's transfer and shall presume that any attempted transfer to a party is deemed qualified by the Holder. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 3(a) hereof, in addition to the requirements set forth in Section 3(b) and 3(c), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

 
5
 

 

3. Note Conversions; Interest Payments; Prepayments, Transfers, Etc .

 

(a) The Holder of this Note is entitled, at its option, beginning on the 181th day after Effective Date, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") at a price (" Conversion Price ") for each share of Common Stock equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price of the Common Stock as reported on the OTCQB marketplace which the Company's shares are traded or any market upon which the Common Stock may be traded in the future (" Exchange "), for the ten (10) prior trading days including the day upon which a Notice of Conversion is received by the Company and its transfer agent (provided such Notice of Conversion is delivered by electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price) beginning on the 181th day after Effective Date.

 

(b) If the shares have not been delivered within three (3) business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the transfer agent of the Company delivering the shares of Common Stock to the Holder within three (3) business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share . To the extent the Conversion Price of the Company's Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this decrease.

 

(c) At any time or times on or after the Maturity Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the following, the Holder shall not be limited to aggregate conversions of 4.99% ("Conversion Limitation 1"). The Holder shall have the authority to determine whether the restriction contained in this Section 3(c) will limit any conversion hereunder. The Holder may waive the conversion limitation described in this Section 3(c) , in whole or in part, upon and effective after 61-days prior written notice to the Company to increase such percentage to up to 9.99% ("Conversion Limitation 2").

 

(d) The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share except in the event that rounding up would violate the conversion limitation set forth in section 3(c) above.

 

 
6
 

 

(e) If the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (" Convertible Securities "), other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold (collectively, the " Common Stock Equivalents ") and the aggregate of the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the " Aggregate Per Common Share Price ") shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be reduced to the lower of: (i) the Conversion Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per Common Share Price (whether or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable in whole or in part) as of the earlier of (A) the date on which the Company shall enter into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion Price shall be made under this Section 6 upon the issuance of any Convertible Security which is outstanding on the day immediately preceding the Issuance Date. No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

 

(f) Interest on any unpaid principal balance of this Note shall be paid at the rate of ten percent (10%) per annum with the first payment being made on the sixth-month anniversary of this Note. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time after six months, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 3(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(g) The Notes may be prepaid, in whole or in part, with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at 120% of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but less than 150 days after the issuance date, then at 130% of the face amount plus any accrued interest; (iii) if the note is prepaid within 150 days after the issuance date but less than 180 days after the issuance date, then at 140% of the face amount plus any accrued interest. This Note may not be prepaid after the 180th day without written permission from Holder. Such redemption must be closed and funded within three (3) days of giving notice of redemption of the right to redeem shall be null and void.

 

(h) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

(i) In case of any Sale Event (not to include a sale of all or substantially all of the Company's assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

 
7
 

 

4. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 

 

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

 

8. If one or more of the following described "Events of Default" shall occur:

 

(a) The Company shall default in the payment of principal or interest on this Note to the Holder by the Company as of the Maturity Date; or

 

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note under which this note was issued shall be false or misleading in any respect; or

 

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

 

(d) The Company shall (1) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (2) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (3) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

 

 
8
 

 

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder with the exception of the current litigation that is already disclosed as reported on the Company's public filings; or

 

(h) The Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than ten (10) consecutive days;

 

(i) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within three (3) business days of its receipt of a Notice of Conversion (provided that a reasonable attorney opinion has been provided by Holder to the Company in which it deems it can reasonably rely); or

 

(j) The Company shall not be "current" in its filings with the Securities and Exchange Commission, and such shall not be cured within ten (10) business days; or

 

(k) The Company shall lose the "bid" price for its stock and a market (including the OTCBB marketplace or other exchange)

 

Then, or at any time thereafter, unless cured within five (5) business days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(i) the penalty shall be $50 per day the shares are not issued beginning on the 5th day after the conversion notice was delivered to the Company. This penalty shall increase to $100 per day beginning on the 10th day. The penalty for a breach of Section 8(k) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(h), the outstanding principal due under this Note shall increase by 50%. Further, if a breach of Section 8(m) occurs or is continuing after the 6-month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period (after cure period) as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.001 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by ten percent (10%).

 

9. At the Holder's election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice and documentary evidence indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows: Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]. Such failure to deliver will be repayable in the Company's Common Stock.

 

 
9
 

 

10. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

11. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

12. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a "shell issuer.

 

13. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

 

14. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

15. Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto may be settled by binding arbitration pursuant. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association (" AAA "). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this note.

 

16. This Note shall be governed by and construed in accordance with the laws of Florida applicable to contracts made and wholly to be performed within the State of Florida and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of Florida. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

 
10
 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized on the date referenced below.

 

 

ELITE DATA SERVICES, INC.

 

       

Date: May 18, 2016

By

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
11
 

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Elite Data Services, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

Date of Conversion: ________________________________________________________________

 

Applicable Conversion Price: _________________________________________________________

 

Signature: _______________________________________________________________________

                 [Print Name of Holder and Title of Signer]

 

Address: ________________________________________________________________________

 

                 ________________________________________________________________________

 

SSN or EIN: _____________________________

 

Shares are to be registered in the following name: __________________________________________

 

Name: __________________________________________________________________________

 

Address: ________________________________________________________________________

 

Tel:  ___________________________________

 

Fax: ___________________________________

 

SSN or EIN: _____________________________

 

Shares are to be sent or delivered to the following account: __________________________________

 

Account Name: ___________________________________________________________________

 

Address: ________________________________________________________________________

 

 
12
 

 

EXHIBIT B

 

WARRANT NO.1

 

WARRANT AGREEMENT

 

NEITHER THIS WARRANT NOR THE SHARES OF PREFERRED STOCK FOR WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

WARRANT TO PURCHASE SERIES B PREFERRED STOCK

EXERCISE PRICE: $0.001 PER SHARE

 

Warrant Certificate Number: W-BFCF-1

Number of Shares of Preferred Stock: Four Million (4,000,000) Shares   

Date of Issuance: May 18, 2016  

Expiration Date: May 18, 2019 at 5:00 PM, New York Time

 

ELITE DATA SERVICES, INC. (OTCBB:DEAC), a Florida corporation (the " Company "), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BIRCH FIRST CAPITAL FUND LLC , a Delaware limited liability and/or assigns, the registered holder hereof or its permitted assigns (the " Holder "), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Preferred Stock (including any Warrants to Purchase Preferred and/or Common Stock issued in exchange, transfer or replacement hereof, the " Warrant "), at any time or times on or after the Issuance Date, but not after 5:00 p.m., New York time, on May 18, 2019 (the " Expiration Date "), Four Million (4,000,000) fully paid nonassessable shares of Preferred Stock (as defined below) (the " Warrant Shares "). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 13. This Warrant is issued pursuant to that certain First Amendment to the Settlement Agreement and Stipulation (the " Settlement Agreement ") dated as of May 18, 2016 by and among the Company and the original Holder hereof.

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day after the Issuance Date, in whole or in part, by delivery of a written notice, in the form attached hereto as Exhibit A (the " Exercise Notice "), of the Holder's election to exercise this Warrant. The Holder shall be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the fifth (5th) Business Day following the date on which the Company has received the Exercise Notice, the Company shall transmit an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer agent (" Transfer Agent "). On or before the tenth (10th) Business Day following the date on which the Company has received the Exercise Notice (the " Share Delivery Date "), the Company shall issued in book position, registered in the Company's share register in the name of the Holder or its designee, for the number of shares of Preferred Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are delivered by book position confirmation evidencing such Warrant Shares, as the case may be. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section IV) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Preferred Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Preferred Stock to be issued shall be rounded down to the nearest whole number.

 

 
13
 

 

(b) Exercise Price. For purposes of this Warrant, the (" Exercise Price ") means $0.001 per share for the total amount of the Warrant Shares granted to Holder in this Warrant.

 

(c) Payment of Exercise Price . Within two (2) Trading Days of the date of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash or by wire transfer of immediately available funds. In lieu of such cash payment, the Holder may also exercise the Warrant by delivery to the Company a written note of an election to effect a cashless exercise for Warrant Shares in whole or in part, pursuant to this Section 1(c) (the "Cashless Exercise"). To the effect a Cashless Exercise, the Holder will surrender this Warrant for that number of shares of Preferred Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between (i) the then current Market Price of a share of the Preferred Stock on the date of exercise, and (ii) the Purchase Price, and the denominator of which shall be the then current Market Price per share of Preferred Stock. In the event that this Warrant is not exercised in full immediately prior to the end of the Exercise Period and at such time the then current Market Price of a share of Preferred Stock is greater than the Purchase Price, this Warrant shall be deemed automatically exercised as to the remaining Warrant Shares at such time by Cashless Exercise without the delivery of any written notice from the Holder.

 

(d) Disputes . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

(e) Beneficial Ownership . The Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 4.99% (the " Maximum Percentage ") of the shares of Common Stock underlying the Preferred Stock outstanding immediately after giving effect to such exercise. The Company shall be entitled to rely on Holder's exercise notice as an indication that Holder will not, pursuant to such exercise, exceed the Maximum Percentage. For purposes of the foregoing sentence, the aggregate number of shares of Preferred Stock beneficially owned by such Person and its affiliates shall include the number of shares of Preferred Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Preferred Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Preferred Stock, the Holder may rely on the number of outstanding shares of Preferred Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Preferred Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of shares of Preferred Stock then outstanding. In any case, the number of outstanding shares of Preferred Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Preferred Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

 
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2. REPRESENTATIONS .

 

(a) By the Holder . The Holder represents and warrants to the Company as follows:

 

(i)

It is an "accredited investor" within the meaning of Rule 501 of the Securities Act. This Warrant is acquired for the Holder's own account for investment purposes and not with a view to any offering or distribution within the meaning of the Securities Act and any applicable state securities laws. The Holder has no present intention of selling or otherwise disposing of the Warrant or the Warrant Shares in violation of such laws; and

(ii)

The Holder has sufficient knowledge and expertise in financials and business matters as to be capable of evaluating the merits and risk of its investment in the Company. The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to make this investment. The Holder understands that this investment involves a high degree of risk and could result in a substantial or complete loss of its investment. The Holder is capable of bearing the economic risks of such investment.

(iii)

This Warrant has been authorized by all necessary corporate action of the Holder and constitutes a valid and legally binding obligation of the Holder, enforceable in accordance with its terms.

(iv)

The Holder acknowledges that the Company has indicated that the Warrant and the Warrant Shares have not been registered under the Securities Act by reason of their issuance in a transaction exempt from registration requirements thereof, and that the Warrant Shares will bear a legend stating that such securities have not been registered under the Securities Act and may not be sold or transferred in the absence of such registration or an exemption from such registration.

 

(b) By the Company . The Company represents and warrants that:

 

(i)

It (A) is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization, (B) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and to consummate the transactions contemplated hereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

(ii)

The execution, delivery and performance by the Company of this Warrant (A) has been duly authorized by all necessary corporate action, (B) does not and will not contravene the Company's charter or bylaws or any other organizational document and (C) does not and will not contravene any applicable law or any contractual restriction binding on or otherwise affecting the Company or any of its properties or result in a default under any agreement or instrument to which the Company is a party or by which the Company or its properties may be subject.

(iii)

This Warrant has been duly executed and delivered by the Company, and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium and other laws affecting the rights of creditors generally and general principles of equity.

 

 
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(iv)

Assuming the accuracy of the representations made by the Holder in Section 2 hereof, no authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any governmental authority is or will be necessary in connection with the execution and delivery by the Company of this Warrant, the issuance by the Company of the Warrant Shares, the consummation of the transactions contemplated hereby, the performance of or compliance with the terms and conditions hereof, or to ensure the legality, validity, and enforceability hereof.

(v)

The Company has reserved solely for issuance and delivery upon the exercise of this Warrant, such number of shares of Preferred Stock to provide for the exercise in full of this Warrant.

(vi)

Neitherthe Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration, or the filing of a prospectus qualifying the distribution, of this Warrant being issued hereby under the Securities Act or cause the issuance of this Warrant to be integrated with any prior offering of securities of the Company for purposes of the Securities Act.

 

1.

Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and non-assessable and free from all taxes, liens, claims and encumbrances.

2.

Authorization and Reservation of Shares. During the Exercise Period, the Company shall have duly authorized a sufficient number of shares of Preferred Stock, free from preemptive rights and from any other restrictions imposed by the Company without the consent of the Holder, to provide for the exercise in full of this Warrant. The Company shall at all times during the Exercise Period reserve and keep available out of such authorized but unissued shares of Preferred Stock such number of shares to provide for the exercise in full of this Warrant.

3.

Listing. In connection with the Holder's exercise of Registration Rights hereunder, the Company shall use its best efforts to promptly secure the listing of the shares of Common Stock underlying the Preferred Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Preferred Stock are then listed or become listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain such listing for so long as any other shares of Preferred Stock shall be so listed.

4.

Successors and Assigns. Except as expressly provided otherwise herein, this Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of the Company's assets.

5.

Blue Sky Laws. The Company shall, on or before the date of issuance of any Warrant Shares, take such actions as the Company shall reasonably determine are necessary to qualify the Warrant Shares for, or obtain exemption for the Warrant Shares for, sale to the Holder of this Warrant upon the exercise hereof under applicable securities or "blue sky" laws of the states of the United States; provided, however, that the Company shall not be required to qualify as a foreign corporation.

 

 
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6.

Rule 144 Reports. For so long as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act the Company agrees to use its best efforts to take all actions reasonably necessary to enable the Holder to sell the Warrant Shares without registration under the Securities Act within the limitations of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC, including filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of the Holder, the Company shall deliver to the Holder a written statement as to whether it has complied with such requirements.

 

3. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

 

(a) Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

(b) Transfer of Warrant . This Warrant may be transferred only upon the written consent of the Company, which may be withheld in its sole discretion. No such consent shall be required upon the transfer of this Warrant under the laws of Descent. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant, registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(c) Lost, Stolen or Mutilated Warrant . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(d) Exchangeable for Multiple Warrants . This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Preferred Stock shall be given.

 

(e) Issuance of New Warrants . Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant, the Warrant Shares designated by the Holder which, when added to the number of shares of Preferred Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

 
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4. NOTICES.

 

Any notice, statement or demand authorized by this Warrant Agreement or made by the Warrant Agent or by the holder of any Warrant to or on the Corporation shall be both (1) emailed to the Company as set forth herein , and ( 2) delivered by hand or sent by registered or certified mail or overnight courier service addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Elite Data Services, Inc.   

4447. N Central Expressway

Ste. 110-135

Dallas, TX 75205  

Attn: Chief Operating Officer  

corp@edscompanies.com

 

Any notice, statement, or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Corporation to or on the Warrant Agent shall be delivered by hand or sent be registered certified mail or overnight courier service, addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Birch First Capital Fund LLC

c/o Birch First Capital Management LLC

121 S. Orange Avenue, Ste. 1500

Orlando, FL 32801

Attn: Pier S. Bjorklund, Manager  

admin@birchfirst.com

 

5. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

6. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida.

 

 
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7. FORUM SELECTION CLAUSE . Any dispute arising under or in connection with the Warrant or related to the terms of this Agreement shall be subject to the exclusive jurisdiction of the state of Florida located in Orlando, Florida, and any dispute between the parties shall come within the jurisdiction of the court in Orange County, Florida.

 

8. CONSTRUCTION; HEADINGS . This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

9. DISPUTE RESOLUTION . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

10. REMEDIES, OTHER OBLIGATIONS, BREACHES, AND INJUNCTIVE RELIEF . The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

 

11. TRANSFER . This Warrant may not be offered for sale, sold, transferred or assigned without the written consent of the Company, which may be withheld in its sole discretion, and only in compliance with applicable Federal and State securities laws.

 

12. WARRANT AGENT . The Company shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register in addition to sending an email to the address set forth in Section 4 hereinabove or to such other email address as provided by the Company.

 

 
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13. CERTAIN DEFINITIONS . For purposes of this Warrant, the following terms shall have the following meanings:

 

"Bloomberg" means Bloomberg Financial Markets.

 

"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

"Closing Bid Price" means, for any security as of any date, the last closing bid price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price, as the case may be, then the last bid price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

"Common Stock" means (i) the Company's shares of Common Stock, par value $0.0001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

"Eligible Market" means the Principal Market, The New York Stock Exchange, Inc., The American Stock Exchange or The NASDAQ Capital Market.

 

"Fundamental Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock and Preferred Stock (not including any shares of Common Stock of Preferred Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Common Stock of Preferred Stock (not including any shares of Common Stock of Preferred Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock and Preferred Stock, or (vi) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Preferred Stock.

 

 
20
 

 

"Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose Preferred stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

"Preferred Stock" means (i) the Company's shares of Series B Preferred Stock, par value $0.0001 per share, (ii) any share capital into which such Preferred Stock shall have been changed or any share capital resulting from a reclassification of such Preferred Stock, (ii) convertible into a certain number shares of Common Stock, other rights and provisions as set forth in the Company's Certificate of Designation of Series B Preferred Stock, attached hereto as Exhibit B.

 

"Principal Market" means The OTC Bulletin Board.

 

"Registration Statement" means a registration statement on Form S-1, Form S-3, or such other eligible registration form as determined in the sole discretion of the Company, which registers the resale of the Warrant Shares pursuant to Rule 415 promulgated under the Securities Act.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Successor Entity" means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

"Trading Day" means any day on which the Common Stock underlying the Preferred Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Preferred Stock, then on the principal securities exchange or securities market on which the Preferred Stock are then traded; provided that "Trading Day" shall not include any day on which the Preferred Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Preferred Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 5:00 p.m., New York time).  

 

[Signature Page to Follow]

 

 
21
 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Preferred Stock to be duly executed as of the Issuance Date set out above.

 

 

ELITE DATA SERVICES, INC.

A Florida Corporation

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
22
 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ELITE DATA SERVICES, INC.

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (" Warrant Shares ") of Elite Data Services Inc., a Florida corporation (the " Company "), evidenced by the attached Warrant to Purchase Common Stock (the " Warrant "). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Payment of Exercise Price . The holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

2. Delivery of Warrant Shares . The Company shall deliver to the Holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

3. Confirmation . Please send confirmation of receipt of this Exercise Notice to the following facsimile number: ______________________ or email address: ____________________.

 

Date: _________ __, ______

 

_____________________________

            Name of Registered Holder

 

 

By: __________________________

Name: ________________________

Title: _________________________

 

 
23
 

 

EXHIBIT B

 

CERTIFICATE OF DESIGNATION OF SERIES B PREFERRED STOCK

 

See Attached.

 

 

 

 

 

 

 
24
 

 

EXHIBIT C

 

AMENDED AND RESTATED REDEEMABLE NOTE NO. 2

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT")

 

US $300,000.00

 

ELITE DATA SERVICES, INC.  

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE NO. 2

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of BIRCH FIRST ADVISORS LLC , a Delaware limited liability company and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of THREE HUNDRED THOUSAND DOLLARS (U.S. $300,000.00) on July 23, 2017 (" Maturity Date ") and to pay interest on the principal amount outstanding hereunder at the rate of ten percent (10%) per annum commencing on July 23, 2015 (the " Effective Date "), the original date of issuance of the Original New Note, pursuant to the terms of the Original Settlement Agreement dated on or about July 23, 2015 and the First Amendment to the Original Agreement dated even date herewith between Company and Holder, of which this Note is made apart. The Company will pay interest payment and the outstanding principal due upon this Note at the sixth month anniversary and continuing until the Maturity Date. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 3(f) herein.

 

This Note is subject to the following additional provisions:

 

1. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

2. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act "), and applicable state securities laws. Holder shall provide the Company with 3-day written notice of the Note's transfer and shall presume that any attempted transfer to a party is deemed qualified by the Holder. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 3(a) hereof, in addition to the requirements set forth in Section 3(b) and 3(c), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

 

 
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3. Note Conversions; Interest Payments; Prepayments, Transfers, Etc .

 

(a) The Holder of this Note is entitled, at its option, beginning on the 181th day after Effective Date, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") at a price (" Conversion Price ") for each share of Common Stock equal to the lesser of $0.01 per share or a discount of fifty-eight percent (58%) of the lowest trading price of the Common Stock as reported on the OTCQB marketplace which the Company's shares are traded or any market upon which the Common Stock may be traded in the future (" Exchange "), for the ten (10) prior trading days including the day upon which a Notice of Conversion is received by the Company and its transfer agent (provided such Notice of Conversion is delivered by electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price) beginning on the 181th day after Effective Date.

 

(b) If the shares have not been delivered within three (3) business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the transfer agent of the Company delivering the shares of Common Stock to the Holder within three (3) business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share . To the extent the Conversion Price of the Company's Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this decrease.

 

(c) At any time or times on or after the Maturity Date, the Holder shall be entitled to convert all of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the following, the Holder shall not be limited to aggregate conversions of 4.99% ("Conversion Limitation 1"). The Holder shall have the authority to determine whether the restriction contained in this Section 3(c) will limit any conversion hereunder. The Holder may waive the conversion limitation described in this Section 3(c) , in whole or in part, upon and effective after 61-days prior written notice to the Company to increase such percentage to up to 9.99% ("Conversion Limitation 2").

 

(d) The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share except in the event that rounding up would violate the conversion limitation set forth in section 3(c) above.

 

 
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(e) If the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (" Convertible Securities "), other than the Note, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold (collectively, the " Common Stock Equivalents ") and the aggregate of the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, plus the consideration received by the Company for issuance of such Common Stock Equivalent divided by the number of shares of Common Stock issuable pursuant to such Common Stock Equivalent (the " Aggregate Per Common Share Price ") shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall make the Aggregate Per Share Common Price be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be reduced to the lower of: (i) the Conversion Price; or (ii) a twenty-five percent (25%) discount to the lowest Aggregate Per Common Share Price (whether or not such Common Stock Equivalents are actually then exercisable, convertible or exchangeable in whole or in part) as of the earlier of (A) the date on which the Company shall enter into a firm contract for the issuance of such Common Stock Equivalent, or (B) the date of actual issuance of such Common Stock Equivalent. No adjustment of the applicable Conversion Price shall be made under this Section 6 upon the issuance of any Convertible Security which is outstanding on the day immediately preceding the Issuance Date. No adjustment shall be made to the Conversion Price upon the issuance of Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of any Convertible Security or Common Stock Equivalent.

 

(f) Interest on any unpaid principal balance of this Note shall be paid at the rate of ten percent (10%) per annum with the first payment being made on the sixth-month anniversary of this Note. Interest shall be paid by the Company in Common Stock ("Interest Shares"). Holder may, at any time after six months, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 3(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(g) The Notes may be prepaid, in whole or in part, with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at 120% of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but less than 150 days after the issuance date, then at 130% of the face amount plus any accrued interest; (iii) if the note is prepaid within 150 days after the issuance date but less than 180 days after the issuance date, then at 140% of the face amount plus any accrued interest. This Note may not be prepaid after the 180th day without written permission from Holder. Such redemption must be closed and funded within three (3) days of giving notice of redemption of the right to redeem shall be null and void.

 

(h) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

 
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(i) In case of any Sale Event (not to include a sale of all or substantially all of the Company's assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

4. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 

 

5.  No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

 

8. If one or more of the following described "Events of Default" shall occur:

 

(a) The Company shall default in the payment of principal or interest on this Note to the Holder by the Company as of the Maturity Date; or

 

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note under which this note was issued shall be false or misleading in any respect; or

 

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

 

(d) The Company shall (1) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (2) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (3) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

 
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(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

 

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

 

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder with the exception of the current litigation that is already disclosed as reported on the Company's public filings; or

 

(h) The Company shall have its Common Stock delisted from a market (including the OTCQB marketplace) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than ten (10) consecutive days;

 

(i) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within three (3) business days of its receipt of a Notice of Conversion (provided that a reasonable attorney opinion has been provided by Holder to the Company in which it deems it can reasonably rely); or

 

(j) The Company shall not be "current" in its filings with the Securities and Exchange Commission, and such shall not be cured within ten (10) business days; or

 

(k) The Company shall lose the "bid" price for its stock and a market (including the OTCBB marketplace or other exchange)

 

Then, or at any time thereafter, unless cured within five (5) business days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(i) the penalty shall be $250 per day the shares are not issued beginning on the 5th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The penalty for a breach of Section 8(k) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(h), the outstanding principal due under this Note shall increase by 50%. Further, if a breach of Section 8(m) occurs or is continuing after the 6-month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period (after cure period) as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.001 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by ten percent (10%).

 

 
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9. At the Holder's election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice and documentary evidence indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows: Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]. Such failure to deliver will be repayable in the Company's Common Stock.

 

10. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

 

11.  Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

 

12. The Company represents that it is not a "shell" issuer and has never been a "shell" issuer or that if it previously has been a "shell" issuer that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a "shell issuer.

 

13. The Holder agrees that so long as this Note from the Holder and the Company remains outstanding, the Holder will not enter into or effect "short sales" of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon delivery of a conversion notice by the Holder, the Holder immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

 

14. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

15. Any dispute or claim arising to or in any way related to this Note or the rights and obligations of each of the parties hereto may be settled by binding arbitration pursuant. All arbitration shall be conducted in accordance with the rules and regulations of the American Arbitration Association (" AAA "). AAA shall designate an arbitrator from an approved list of arbitrators following both parties' review and deletion of those arbitrators on the approved list having a conflict of interest with either party. The Company agrees that a final non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this note.

 

16. This Note shall be governed by and construed in accordance with the laws of Florida applicable to contracts made and wholly to be performed within the State of Florida and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of Florida. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized on the date referenced below.

 

 

ELITE DATA SERVICES, INC.

 

       

Date: May 18, 2016

By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

  

 
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EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Elite Data Services, Inc. ("Shares") according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

Date of Conversion: ________________________________________________________________

 

Applicable Conversion Price: _________________________________________________________

 

Signature: _______________________________________________________________________

                  [Print Name of Holder and Title of Signer]

 

Address: ________________________________________________________________________

 

                 ________________________________________________________________________

 

SSN or EIN: _____________________________

 

Shares are to be registered in the following name: __________________________________________

 

Name: __________________________________________________________________________

 

Address: ________________________________________________________________________

 

Tel: ___________________________________

 

Fax: ___________________________________

 

SSN or EIN: _____________________________

 

Shares are to be sent or delivered to the following account:

 

Account Name: ___________________________________________________________________

 

Address: ________________________________________________________________________

 

 
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EXHIBIT D

 

AMENDED AND RESTATED CONSULTING AGREEMENT

 

THIS AMENDED AND RESTATED CONSULTING AGREEMENT (the "Agreement") is made and entered into as of this 18th day of May 2016 ("Effective Date") by and between ELITE DATA SERVICE INC. f/k/a Dynamic Energy Alliance Corporation (OTCBB:DEAC), a Florida Corporation (the "Company") and BIRCH FIRST ADVISORS, LLC, a Delaware limited liability company and/or assigns (the "Consultant").

 

RECITALS

 

WHEREAS, Consultant has substantial business consulting experience and skills;

 

WHEREAS, Company and Consultant executed that certain Consulting Agreement dated on or about July 23, 2015 (the "Original Consulting Agreement"), pursuant to the terms and conditions of that certain Settlement Agreement (the "Original Settlement Agreement") dated even date, between Company and Consultant; and

 

WHEREAS, Company and Consultant desire to amend and restate certain terms of Original Consulting Agreement, pursuant to the First Amendment to the Original Settlement Agreement (the "First Amendment"), dated even date, in which the Company has agreed to engage the consulting services of Consultant under the amended and restated terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1. CONSULTING AND ADVISORY SERVICES; NATURE OF SERVICES. Attached hereto as Exhibit A, and incorporated herein by this reference, is a description of the services to be provided by the Consultant hereunder (the "Consulting Services"). Consultant hereby agrees to utilize its best efforts in performing the Consulting Services. Consultant shall not make any representations to any third party other than those expressly set forth in documents provided by the Company and shall have no power or authority to act for the Company except as expressly set forth herein.

 

2. TERM OF AGREEMENT . This Agreement shall be in full force and effect commencing on the date of execution of this Agreement and shall continue thereafter for twenty-four (24) calendar months ("Initial Term"). This Agreement may be renewed for one successive twelve (12) calendar month term if mutually agreed to in writing by both Company and Consultant at least thirty (30) days prior to the end of the then term. This Agreement shall conclude at the close of business on the same date twenty-four (24) calendar months after the execution of this Agreement or then term, whichever is applicable ("Termination Date").

 

3. TERMINATION . Notwithstanding herein to the contrary, the Company shall have the right to terminate this Agreement solely for Cause as defined herein at any time upon sixty (60) days written notice to the Consultant. Consultant shall have the right to terminate this Agreement if Company fails to comply with any of the material terms of this Agreement, including without limitation its responsibilities for payment of fees as set forth in this Agreement. Either party hereto shall have the right to terminate this Agreement without notice in the event of the death, winding-up or dissolution, bankruptcy, insolvency, or assignment for the benefit of creditors of the other party.

 

For purposes of this Agreement, "Cause" shall be limited to any one or more of the following: (i) Consultant fails to perform the services that Consultant is required to perform under the terms of this Agreement, after written demand by Company for immediate performance of such services, provided that Company first gives Consultant written notice of Consultant's failure to perform the services, and a thirty (30) day period to cure such breach; (ii) Consultant breaches any of Consultant's representations, warranties or covenants herein; and/or (iii) Consultant commits any act of material fraud, dishonesty, or misappropriation relating to or involving the Company.

 

 
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4. INDEPENDENT CONSULTANT . Both Company and the Consultant agree that the Consultant will act as an independent contractor in the performance of its duties under this Agreement. Nothing contained in this Agreement shall be construed to imply that Consultant, or any employee, agent or other authorized representative of Consultant, is a partner, member, shareholder, joint venturer, agent, director, officer or employee of Company, unless otherwise agreed to by the parties and in a separate written agreement.

 

5. TIME DEVOTED BY CONSULTANT . It is anticipated that the Consultant shall spend as much time as deemed necessary by the Consultant in its sole discretion, in order to perform the obligations of Consultant hereunder. The Company understands that this amount of time may vary from day-to-day and that the Consultant will perform Consulting Services for other clients and/or companies at the same time, and that Consultant is not making a full time commitment to render the consulting services specified.

 

6. PLACE WHERE AND HOW SERVICES WILL BE PERFORMED . The Consultant will perform most services at Consultant's offices. In addition, the Consultant will perform services on the telephone, facsimile and/or computer and at such other place(s) as necessary to perform these services in accordance with this Agreement. Consultant shall set its own hours and shall utilize such personnel, workspace and services as Consultant deems in its sole discretion to be appropriate in performing such consulting services.

 

7. COMPENSATION TO CONSULTANT . The Consultant's compensation for the Consulting Services shall be more fully described in the Terms of Compensation, set forth in Schedule I, attached hereto and incorporated herein by this reference.

 

8. CONSULTANT REPRESENTATIONS AND WARRANTIES . Consultant represents and warrants to Company for the purpose of inducing Company to enter into and consummate this Agreement as follows:

 

8.1 Consultant is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. Consultant has full power and authority to execute, deliver and perform this Agreement and the Consulting Services.

 

8.2 The execution and delivery by the Consultant of this Agreement has been duly and validly authorized by all requisite actions by the Consultant. No license, consent, authorization or approval of, or notice to, any person, entity or governmental or regulatory authority is required for the Consultant's execution and delivery of this Agreement or its performance of the Consulting Services.

 

8.3 This Agreement has been duly executed and delivered by the Consultant. This Agreement is the legal, valid and binding obligation of the Consultant enforceable against the Consultant in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law effecting creditors' rights generally and to general principals of equity.

 

8.4 Consultant acknowledges that during the performance of its duties and obligations pursuant to this Agreement, Consultant may receive, learn or otherwise become aware of information regarding the Company including without limitation its business methods, strategies, policies, procedures, techniques, research, historical or projected financial information, budgets, trade secrets, or any other confidential information of or relating to or dealing with the business operations, activities or strategies of the Company ("Confidential Information"). Consultant shall not use, disclose or communicate any of Confidential Information other than for the purpose of fulfilling Consultant's duties and obligations under this Agreement. Confidential Information shall not include information (i) known to or owned by Consultant prior to the date of this Agreement, (ii) developed by Consultant independent of the Company, (iii) that was at the time of disclosure to Consultant or thereafter became public acknowledge through no fault or omission of Consultant; or, (iv) was lawfully obtained by Consultant from a third party under no obligation of confidentiality to the Company. This provision shall survive any termination or expiration of this Agreement.

 

 
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9. COMPANY'S REPRESENTATIONS AND WARRANTIES . Company represents and warrants to Consultant for the purpose of inducing Consultant to enter into and consummate this Agreement as follows:

 

9.1 Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Company has full power and authority to execute, deliver and perform this Agreement.  

 

9.2 The execution and delivery by the Company of this Agreement has been duly and validly authorized by all requisite actions by the Company. No license, consent, authorization or approval of, or notice to, any person, entity or governmental or regulatory authority is required for the Company's execution and delivery of this Agreement.

 

9.3 This Agreement has been duly executed and delivered by the Company. This Agreement is the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its respective terms, subject to the effect to any applicable bankruptcy, insolvency, reorganization, moratorium or similar law effecting creditors' rights generally and to general principals of equity.

 

9.4  The execution and delivery by the Company of this Agreement does not conflict with, constitute a breach of or a default under (i) any applicable law, or any applicable rule, judgment, order, writ, injunction, or decree of any court; (ii) any applicable rule or regulation of any administrative agency or other governmental authority; (iii) the certificate of incorporation and Bylaws of the Company; (iv) any agreement, indenture, instrument or contract to which the Company is now a party or by which it is bound.

 

9.5 No representation or warranty by the Company in this Agreement and no information in any statement, certificate, exhibit, schedule or other document furnished, or to be furnished by the Company to Consultant pursuant hereto, or in connection with the services contemplated hereby, to the knowledge of the Company, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. To the knowledge of the Company, there is no fact which the Company has not disclosed to Consultant, in writing, which materially adversely affects, nor, so far as the Company can now foresee, may materially adversely affect the business, operations, prospects, properties, assets, profits or financial condition of the Company.

 

10. INDEMNIFICATION . The Company hereby agrees to indemnify and hold Consultant harmless from any and all claims and liabilities incurred by Consultant as a result of Consultant's providing of the consulting services to be provided hereunder, including specifically, but not by way of limitation, any claims or liabilities arising out of or which are based upon (i) any material misstatement or omission contained in any materials or offering documents utilized by the Company, or (ii) any intentional actions by the Company, direct or indirect, in violation of any applicable federal or state securities laws or regulations. Furthermore, the Company agrees to reimburse Consultant for any legal or other expenses incurred by Consultant in connection with investigating or defending any such action, proceeding, investigation, or claim specified above. The indemnity obligations of the Company under this paragraph shall extend to the shareholders, directors, officers, employees, agents, attorneys and control persons of the Company. The indemnity obligations of the Company under this Section 9 shall continue and be binding upon the Company and shall inure to the benefit of any successors, assigns, heirs, and personal representatives of, the Consultant, despite the termination of this Agreement.

 

11. OTHER AGREEMENTS . Consultant hereby represents and warrants that it is not bound by the terms of any agreement to refrain it from using or disclosing any trade secret or confidential or proprietary information that would impede its services to the Company or to refrain from competing, directly or indirectly, with a business of the same nature as Company. The Consultant will exercise its best efforts and use its best skills in performing its obligations under this Agreement, except to the extent it may be prohibited by prior agreements, all of which agreements have been disclosed to Company, and Consultant has provided true and correct copies of same to the Company prior to the execution of this Agreement. The Consultant represents that its performance of all the terms of this Agreement and as Consultant of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Consultant in confidence or in trust prior to its service to the Company.

 

 
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12. MISCELLANEOUS .

 

12.1 Notices . All written notices, demands, or requests of any kind, which either party may be required to or have any desire to serve on the other in connection with this Agreement, must be served by registered or certified mail, with postage prepaid and return receipt requested. In lieu of mailing, either party may cause delivery of such notice, demands and requests to be made by personal hand delivery, courier service or facsimile transmission, provided that acknowledgment of receipt is made. Notice shall be deemed given upon personal hand delivery, courier service or date of facsimile transmission, or date of delivery of registered or certified mail. All such notices, demands, and requests shall be delivered as follows:

 

If to the Company:

Elite Data Services Inc.

4447 N. Central Expressway, Suite 110-135  

Dallas, Texas 75205  

Attn: Chief Executive Officer  

Ph. (972) 885-3981

Email: corp@edscompanies.com

 

 

If to the Consultant:

BIRCH FIRST ADVISORS, LLC

121 S. Orange Avenue, Suite 1500  

Orlando, Florida 32801  

Attn: Pier S. Bjorklund  

Ph. (561) 228 - 4107  

Email: pbjorklund@birchfirst.com  

 

12.2 Entire Agreement . This Agreement, including any Exhibits or Schedules attached hereto, represents the entire Agreement between the parties in relation to the subject matter hereof and supersedes all such prior agreements, including but not limited to, any correspondence, memoranda, or agreements, whether written or oral, originating before the date of this Agreement between such parties relating to such subject matter unless otherwise specifically stated.

 

12.3 Separate Agreements . The parties to this Agreement agree to execute separate agreements as mutually deemed necessary by them for services being provided by Consultant in this Agreement or additional services to be provided by Consultant and/or an affiliate of Consultant from time to time.

 

12.4 Company and Affiliates . Terms "Consultant" and "Company" as used in this Agreement will be deemed to include any affiliate of the Consultant or Company, respectively, now or during the term of this Agreement. An affiliate is defined as a person who directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with a person or entity.

 

12.5 Acknowledgement . The representative executing this Agreement on behalf of the Consultant certifies and acknowledges that he or she has carefully read all of the provisions of this Agreement and that he or she understands and will fully and faithfully comply with its provisions.

 

 
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12.6 Amendment of Agreement . This Agreement may be altered or amended, in whole or in part, only in a writing specifically referencing this Agreement and signed by the party against whom enforcement is sought.

 

12.7 Assignment . This Agreement shall be binding upon and inure to the benefit of the parties hereto and no assignment shall be allowed without first obtaining the written consent of the non-assigning party.

 

12.8 Waiver . No waiver by a party of any provision of this Agreement shall be considered a waiver of any other provision or any subsequent breach of the same or any other provision. The exercise by a party of any remedy provided in this Agreement or at law shall not prevent the exercise by that party of any other remedy provided in this Agreement or at law.

 

12.9 Captions . The captions appearing in this Agreement are inserted as a matter of convenience and for reference and in no way affect this Agreement, define, limit or describe its scope or any of its provisions.

 

12.10 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. In any legal action involving this Agreement or the parties' relationship, the parties agree that the exclusive venue for any lawsuit arising therefrom shall be in a competent court located in Orange County, Florida.

 

12.11 Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, personal representatives, successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Consultant are personal and shall not be assigned.

 

12.12 Severability . If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement and this Agreement shall be carried out as if such invalid or unenforceable provision were not contained herein.

 

12.13 Arbitration . In the event of an unresolved breach of this Agreement, the parties agree to submit to binding arbitration regarding all other disputes and/or controversies that may arise out of or in connection with this Agreement. Arbitration shall be conducted in Orange County, Florida in accordance with the rules of the American Arbitration Association ("AAA"). The AAA shall choose a single neutral arbitrator with at least ten (10) years experience in business law. The decision of the arbitrator shall be final and binding on both parties, who hereby agree to comply therewith. The arbitrator shall not have jurisdiction to decide whether injunctive or other equitable relief should be granted to either party. In every case where the arbitrator decides that this Agreement has been properly fulfilled by a party, all costs and fees, including reasonable attorneys' fees, incurred during or necessitated by the arbitration proceedings shall be paid by the other party. The prevailing party shall be entitled to reasonable arbitration fees.

 

12.14 Force Majeure . Neither the Company nor the Consultant shall be liable to the other for any delay or failure or any other default in performance of this Agreement due to extraordinary events, circumstances or occurrence beyond the control of the Company or Consultant, as applicable, such as acts of nature (flooding, earthquake, volcano, hurricanes, etc.), terrorist activity, war or armed conflict, strike, riot, crime or any other similar cause which would adversely affect, directly or indirectly, the Company or the performance of the services contemplated between Consultant and Company under this Agreement.

 

 
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12.15 Number of Parties . The singular shall include the plural and the plural the singular and one gender shall include all genders. As used in this Agreement the term Affiliate means a person, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under control with, the Company.

 

12.16 Currency . In all instances, references to monies used in this Agreement shall be deemed to be United States dollars.

 

12.17 Headings . Titles or captions contained herein are inserted as a matter of convenience and for reference, and in no way define, limit, extend, or describe the scope of this Agreement or any provision hereof. No provision in this Agreement is to be interpreted for or against either party because that party or his legal representative drafted such provision.

 

12.18 Counterparts; Facsimile Signatures . This Agreement may be executed simul-taneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties agree that facsimile signatures of this Agreement shall be deemed a valid and binding execution of this Agreement.

 

12.19 Effective Date . This Agreement is effective as of the date of the Effective Date specified above.

 

[Signatures to follow on next page]

 

 
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IN WITNESS WHEREOF, the parties hereto have placed their signatures hereon on the day and year first above written.

 

COMPANY

 

Elite Data Services Inc.  

f/k/a Dynamic Energy Alliance Corporation  

a Florida Corporation

 

     
By:

/s/ Charles Rimlinger

 

 

Charles Rimlinger

 

 

Chief Executive Officer

 

 

 

 

And,

CONSULTANT

 

BIRCH FIRST ADVISORS, LLC

a Delaware limited liability company

By:

/s/ Pier S. Bjorklund

Pier S. Bjorklund,

Managing Director

 

 
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EXHIBIT A

 

DESCRIPTION OF CONSULTING SERVICES

 

The scope of Consulting Services to be provided by Consultant shall be as described hereunder and performed upon written request by the Company, but at times, at places, and utilizing methods, people and services selected solely by Consultant in its discretion, subject to reasonable objection by Company, in connection with its performance of such consulting services:

 

1. Site visits to the Company's offices to collect relevant data, conduct due diligence interviews and consultations and participate in administrative, managerial, financial, executive, board and/or shareholder meetings;

 

2. Review with, and advise the Company's management as to, the Company's capital needs, financing options, estimated use of proceeds, proposed capital structure, and adjustments to capital structure;

 

3. Review with, and advise the Company's management with respect to, any proposed corporate transactions, merger and acquisitions, sales contracts, and/or lines of credit and institutional loans;

 

4. Review with, and advise the Company's management with respect to, the Company's business strategies and new corporate development opportunities in an advisory capacity;

 

5. Review and assist the Company's management in the preparation of business plans, marketing plans, execution plans, financial projections and cash projections going forward;

 

6. Review and assist the Company's management in the preparation of documentation relating to Form 8-K, 10-Q, 10-K and/or S-1 registration filings, board resolutions, annual reports, press releases and shareholder relations;

 

7.  Assist the Company's management in general strategy consultation and new business development, acquisitions, corporate restructuring, and advise the Company on other ad-hoc matters as appropriate, including, but not limited to, assisting with public company requirements and SEC compliance;

 

8. Assist the Company in identifying potential financings (debt or equity) by means of a commercial loan and/or other sources, for such capital ("Arrangement"); or, through a merger, reverse merger, share exchange, asset purchase, asset sale; or, otherwise ("Acquisition") for the Company; and/or

 

9. Assist the Company in identifying potential partners, joint ventures, licensing arrangements and/or otherwise.

 

10. Review and assist Company in drafting certain agreements or contracts as may be requested by the Company from time to time;

 

11. Assist Company in handling creditor negotiations, drafting applicable contract amendments, modifications, and/or debt settlements, including, but not limited, structure payment plans and other relevant options;

 

 
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12. Assist corporate counsel on outstanding lawsuits and other applicable situations in which a representative of the Company needs to assist;

 

In connection with rendering the above consulting services, Consultant shall do no more then identify, and if asked to by the Company, make introductions to, potential business partners for the Company. Consultant shall not engage in negotiations, or participate with the Company in negotiations for investor capital, and Consultant shall in no manner undertake any action which might be construed as the participation in any offer or sales of a security, or might be construed as the rendering of advice in connection with any decision to invest in a security, or might be construed as acting as a broker or dealer or investment adviser under applicable State or Federal Securities Laws. Additionally, Consultants' review of any agreements, contractors or securities filings is not to be construed as the providing of legal advice to the Company, and no action taken by Consultant should be construed as being an action that would otherwise be one taken by a lawyer, certified public accountant or registered broker-dealer.

 

SCHEDULE I

 

TERMS OF COMPENSATION

 

Pursuant to the Consulting Services to be rendered by the Consultant as set forth in Exhibit A herein in this Agreement, Consultant shall be entitled to receive compensation as follows:

 

1. COMPENSATION . As compensation for the services rendered pursuant to this Agreement, the Company shall pay the Consultant during the Initial Term a total sum of Two Hundred Forty Thousand and No/100 Dollars (USD $240,000.00), due and payable in equal monthly payments of Ten Thousand Dollars (USD $10,000.00) , to be paid on the 1 st business day of each month, starting on the date of execution of this Agreement. In the event one or more payments to the Consultant is not made within thirty (30) business days of the due date, then Consultant may elect in writing to require the Company to make such payment in the form of shares of restricted common stock of the Company, pursuant to the terms and conditions of the Company's Stock Option Plan then in effect. Any and all payments due and payable to Consultant in the form of cash and/or stock compensation as set forth hereinabove shall be paid to Birch First Advisors, LLC and/or assigns. Notwithstanding the forgoing, Consultant shall also be entitled to any and all payments set forth in the Amended and Restated Redeemable Note No.2. pursuant to the terms of the First Amendment to the Original Settlement Agreement, dated even date herewith.

 

2. STOCK PURCHASE WARRANT . Upon execution of this Agreement by each of the parties hereto, Company shall grant to the Contractor a warrant to purchase a certain number of shares of common stock of the Company on the terms and condition set forth in an executed warrant agreement substantially in the form attached hereto as Exhibit E.

 

3. EXPENSE REIMBURSEMENT . Company shall reimburse the Consultant for all pre-approved reasonable travel, entertainment, and other expenses, including but not limited to, third-party services, incurred or paid by the Consultant in connection with, or related to, the performance of its duties, responsibilities or services under this Agreement, upon presentation by the Consultant of documentation, expense statements, vouchers, and such other supporting information as the Company may request, or as may be consistent with standard Company practices. Consultant shall obtain prior written approval from Company before incurring any individual expenses exceeding $500.00. Consultant shall submit on or before the 10th day of each month expense reimbursement reports for expenses incurred by Consultant for the preceding month. Company shall reimburse Consultant within twenty (20) business days of receipt of such expense reimbursement reports by the Company each month.

 

 
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EXHIBIT E

 

WARRANT NO. 2

 

WARRANT AGREEMENT

 

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

WARRANT TO PURCHASE COMMON STOCK

EXERCISE PRICE: $0.001 PER SHARE

 

Warrant Certificate Number: W-BFA-1  

Number of Shares of Common Stock: Twenty-Four Million (24,000,000) Shares   

Date of Issuance: May 18, 2016  

Expiration Date: May 18, 2019 at 5:00 PM, New York Time

 

ELITE DATA SERVICES, INC. (OTCBB:DEAC), a Florida corporation (the " Company "), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, BIRCH FIRST ADVISORS LLC , a Delaware limited liability and/or assigns, the registered holder hereof or its permitted assigns (the " Holder "), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the " Warrant "), at any time or times on or after the Issuance Date, but not after 5:00 p.m., New York time, on May 18, 2019 (the " Expiration Date "), Twenty-Four Million (24,000,000) fully paid nonassessable shares of Common Stock (as defined below) (the " Warrant Shares "). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 13. This Warrant is issued pursuant to that certain First Amendment to the Settlement Agreement and Stipulation (the " Settlement Agreement ") dated as of May 18, 2016 by and among the Company and the original Holder hereof.

 

 
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1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the first month anniversary date after the Issuance Date, in whole or in part, subject to a vesting period equal to One Million (1,000,000) shares per month for each month the Advisory Agreement dated May 18, 2016 remains in effect with the Holder (if the Advisory Agreement is terminated early, the Holder shall be entitled to only the number of shares vested as of such termination date, and otherwise forfeit the remaining number of shares not vested), by delivery of a written notice, in the form attached hereto as Exhibit A (the " Exercise Notice "), of the Holder's election to exercise this Warrant. The Holder shall be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the fifth (5th) Business Day following the date on which the Company has received the Exercise Notice, the Company shall transmit an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer Agent (" Transfer Agent "). On or before the tenth (10th) Business Day following the date on which the Company has received the Exercise Notice (the " Share Delivery Date "), the Company shall issue in book position, registered in the Company's share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are evidencing such Warrant Shares, as the case may be. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section IV) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded down to the nearest whole number.

 

(b) Exercise Price. For purposes of this Warrant, the (" Exercise Price ") means $0.001 per share for the total amount of the Warrant Shares granted to Holder in this Warrant.

 

(c) Payment of Exercise Price. Within two (2) Trading Days of the date of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash or by wire transfer of immediately available funds. In lieu of such cash payment, the Holder may also exercise the Warrant by delivery to the Company a written note of an election to effect a cashless exercise for Warrant Shares in whole or in part, pursuant to this Section 1(c) (the "Cashless Exercise"). To the effect a Cashless Exercise, the Holder will surrender this Warrant for that number of shares of Common Stock determined by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between (i) the then current Market Price of a share of the Common Stock on the date of exercise, and (ii) the Purchase Price, and the denominator of which shall be the then current Market Price per share of Common Stock. In the event that this Warrant is not exercised in full immediately prior to the end of the Exercise Period and at such time the then current Market Price of a share of Common Stock is greater than the Purchase Price, this Warrant shall be deemed automatically exercised as to the remaining Warrant Shares at such time by Cashless Exercise without the delivery of any written notice from the Holder.

 

(d) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

 
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(e) Beneficial Ownership. The Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 4.99% (the " Maximum Percentage ") of the shares of Common Stock outstanding immediately after giving effect to such exercise. The Company shall be entitled to rely on Holder's exercise notice as an indication that Holder will not, pursuant to such exercise, exceed the Maximum Percentage. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

2. REPRESENTATIONS .

 

(a)

By the Holder. The Holder represents and warrants to the Company as follows:

 
(i)

It is an "accredited investor" within the meaning of Rule 501 of the Securities Act. This Warrant is acquired for the Holder's own account for investment purposes and not with a view to any offering or distribution within the meaning of the Securities Act and any applicable state securities laws. The Holder has no present intention of selling or otherwise disposing of the Warrant or the Warrant Shares in violation of such laws; and

 
(ii)

The Holder has sufficient knowledge and expertise in financials and business matters as to be capable of evaluating the merits and risk of its investment in the Company. The Holder acknowledges that it has received all the information it considers necessary or appropriate for deciding whether to make this investment. The Holder understands that this investment involves a high degree of risk and could result in a substantial or complete loss of its investment. The Holder is capable of bearing the economic risks of such investment.

 

 
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(iii)

This Warrant has been authorized by all necessary corporate action of the Holder and constitutes a valid and legally binding obligation of the Holder, enforceable in accordance with its terms.

 
(vi)

The Holder acknowledges that the Company has indicated that the Warrant and the Warrant Shares have not been registered under the Securities Act by reason of their issuance in a transaction exempt from registration requirements thereof, and that the Warrant Shares will bear a legend stating that such securities have not been registered under the Securities Act and may not be sold or transferred in the absence of such registration or an exemption from such registration.

 

(b)

By the Company. The Company represents and warrants that:

 

(i)

It (A) is a corporation duly organized, validly existing and in good standing under the laws of the state of its organization, (B) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and to consummate the transactions contemplated hereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

 
(ii)

The execution, delivery and performance by the Company of this Warrant (A) has been duly authorized by all necessary corporate action, (B) does not and will not contravene the Company's charter or bylaws or any other organizational document and (C) does not and will not contravene any applicable law or any contractual restriction binding on or otherwise affecting the Company or any of its properties or result in a default under any agreement or instrument to which the Company is a party or by which the Company or its properties may be subject.

 
(iii)

This Warrant has been duly executed and delivered by the Company, and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium and other laws affecting the rights of creditors generally and general principles of equity.

 
(iv)

Assuming the accuracy of the representations made by the Holder in Section 2 hereof, no authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any governmental authority is or will be necessary in connection with the execution and delivery by the Company of this Warrant, the issuance by the Company of the Warrant Shares, the consummation of the transactions contemplated hereby, the performance of or compliance with the terms and conditions hereof, or to ensure the legality, validity, and enforceability hereof.

 
(v)

The Company has reserved solely for issuance and delivery upon the exercise of this Warrant, such number of shares of Common Stock to provide for the exercise in full of this Warrant.

 

 
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(vi)

Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration, or the filing of a prospectus qualifying the distribution, of this Warrant being issued hereby under the Securities Act or cause the issuance of this Warrant to be integrated with any prior offering of securities of the Company for purposes of the Securities Act.

 

7.

Shares to be Fully Paid. All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and non-assessable and free from all taxes, liens, claims and encumbrances.

8.

Authorization and Reservation of Shares.During the Exercise Period, the Company shall have duly authorized a sufficient number of shares of Common Stock, free from preemptive rights and from any other restrictions imposed by the Company without the consent of the Holder, to provide for the exercise in full of this Warrant. The Company shall at all times during the Exercise Period reserve and keep available out of such authorized but unissued shares of Common Stock such number of shares to provide for the exercise in full of this Warrant.

9.

Listing. In connection with the Holder's exercise of Registration Rights hereunder, the Company shall use its best efforts to promptly secure the listing of the shares of Common Stock underlying Preferred Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed or become listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain such listing for so long as any other shares of Common Stock shall be so listed.

10.

Successors and Assigns. Except as expressly provided otherwise herein, this Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of the Company's assets.

11.

Blue Sky Laws.The Company shall, on or before the date of issuance of any Warrant Shares, take such actions as the Company shall reasonably determine are necessary to qualify the Warrant Shares for, or obtain exemption for the Warrant Shares for, sale to the Holder of this Warrant upon the exercise hereof under applicable securities or "blue sky" laws of the states of the United States; provided, however, that the Company shall not be required to qualify as a foreign corporation.

12.

Rule 144 Reports. For so long as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act the Company agrees to use its best efforts to take all actions reasonably necessary to enable the Holder to sell the Warrant Shares without registration under the Securities Act within the limitations of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC, including filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of the Holder, the Company shall deliver to the Holder a written statement as to whether it has complied with such requirements.

 

 
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3. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

 

(a) Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

(b) Transfer of Warrant. This Warrant may be transferred only upon the written consent of the Company, which may be withheld in its sole discretion. No such consent shall be required upon the transfer of this Warrant under the laws of Descent. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant, registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(c) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(d) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

 

(e) Issuance of New Warrants . Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant, the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

 
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4. NOTICES.

 

Any notice, statement or demand authorized by this Warrant Agreement or made by the Warrant Agent or by the holder of any Warrant to or on the Corporation shall be both 1) emailed to emailed to the Company as set forth herein , and 2) delivered by hand or sent by registered or certified mail or overnight courier service addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Elite Data Services, Inc. 

Attn: Board of Directors  

4447. N Central Expressway

Ste. 110-135  

Dallas, TX 75205

 

Any notice, statement, or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Corporation to or on the Warrant Agent shall be delivered by hand or sent be registered certified mail or overnight courier service, addressed (until another address is filed in writing by the Corporation with the Warrant Agent) as follows:

 

Birch First Advisors LLC

Attn: Pier S. Bjorklund, Manager  

121 S. Orange Avenue, Ste. 1500  

Orlando, FL 32801

 

5. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

6. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida.

 

7. FORUM SELECTION CLAUSE . Any dispute arising under or in connection with the Warrant or related to the terms of this Agreement shall be subject to the exclusive jurisdiction of the state of Florida located in Orlando, Florida, and any dispute between the parties shall come within the jurisdiction of the court in Orange County, Florida.

 

8. CONSTRUCTION; HEADINGS . This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

 
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9. DISPUTE RESOLUTION . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

10. REMEDIES, OTHER OBLIGATIONS, BREACHES, AND INJUNCTIVE RELIEF . The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

 

11. TRANSFER . This Warrant may not be offered for sale, sold, transferred or assigned without the written consent of the Company, which may be withheld in its sole discretion, and only in compliance with applicable Federal and State securities laws.

 

12. WARRANT AGENT . The Company shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register in addition to sending an email to to the address set forth in Section 4 hereinabove or to such other email address as provided by the Company.

 

13. CERTAIN DEFINITIONS . For purposes of this Warrant, the following terms shall have the following meanings:

 

"Bloomberg" means Bloomberg Financial Markets.

 

"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

 
49
 

 

"Closing Bid Price" means, for any security as of any date, the last closing bid price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price, as the case may be, then the last bid price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

"Common Stock" means (i) the Company's shares of Common Stock, par value $0.0001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

"Eligible Market" means the Principal Market, The New York Stock Exchange, Inc., The American Stock Exchange or The NASDAQ Capital Market.

 

"Fundamental Transaction" means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock and Preferred Stock (not including any shares of Common Stock and Preferred Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Common Stock and Preferred Stock (not including any shares of Common Stock and Preferred Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock and Preferred Stock, or (vi) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

"Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

 
50
 

 

"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

"Principal Market" means The OTC Bulletin Board.

 

"Registration Statement" means a registration statement on Form S-1, Form S-3, or such other eligible registration form as determined in the sole discretion of the Company, which registers the resale of the Warrant Shares pursuant to Rule 415 promulgated under the Securities Act.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

"Successor Entity" means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

"Trading Day" means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that "Trading Day" shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 5:00 p.m., New York time).

 

[Signature Page to Follow]

 

 
51
 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

 

 

ELITE DATA SERVICES, INC.

A Florida Corporation

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
52
 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ELITE DATA SERVICES, INC.

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (" Warrant Shares ") of Elite Data Services Inc., a Florida corporation (the " Company "), evidenced by the attached Warrant to Purchase Common Stock (the " Warrant "). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Payment of Exercise Price . The holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

2. Delivery of Warrant Shares . The Company shall deliver to the Holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

3. Confirmation . Please send confirmation of receipt of this Exercise Notice to the following facsimile number: ______________________ or email address: ____________________.

 

Date: ____________ __, ______

 

_____________________________

            Name of Registered Holder

 

By: __________________________

Name: ________________________

Title: _________________________

 

 
53
 

 

EXHIBIT F

 

ASSIGNMENT OF 

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE NO. 2

 

THIS ASSIGNMENT made this 18th day of May 2016, by and between BIRCH FIRST ADVISORS LLC ., a Delaware limited liability company("Assignor"), and BIRCH FIRST CAPITAL FUND LLC .,a Delaware limited liability company ("Assignee"):

 

ARTICLE I

ASSIGNMENT OF CONVERTIBLE REDEEMABLE NOTE

 

Pursuant to Section 5 of the executed First Amendment to the Settlement Agreement (the "First Amendment") dated May 18, 2016 by and between ELITE DATA SERVICES INC. (OTC:DEAC) (the "Issuer") and Assignor and Assignee, jointly and severally, and other good and valuable consideration in hand paid by the Assignee to the Assignor, receipt of which is hereby acknowledged, Assignor hereby assigns to the Assignee all of its right, title and interest in and to that certain Amended and Restated Convertible Redeemable Note No.2 (the "Note No.2") entered into on May 18, 2016 by and between the Issuer (also referred to as the "Maker"), and Assignor (also referred to as the "Holder"), in the original principal amount of Three Hundred Thousand Dollars (USD $300,000). The Note No.2 issued to Assignor has not been repaid and consists of the original principal amount plus accrued and unpaid interest.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR

 

Assignor hereby represents and warrants in all material respects to Assignee, with the intent that it will rely thereon in entering into this Agreement and in approving and completing the transactions contemplated hereby, that:

 

Section 2.1 Authority; Due Authorization

 

The Assignor has the full right, power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery by the Assignor of this Agreement, the performance by the Assignor of its obligations hereunder and thereunder, including the delivery of the Closing Deliverables, have been duly and validly authorized by all necessary action in respect thereof. No other proceedings on the part of the Assignor are necessary to authorize the execution and delivery of this Agreement and the performance by the Assignor of its obligations hereunder or thereunder. This Agreement has been, or, when executed will be, duly executed and delivered by the Assignor. This Agreement constitutes valid and binding obligations of the Assignor, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditor's rights generally and to general equitable principles.

 

Section 2.2 Indemnification

 

Assignor agrees to indemnify and save harmless Assignee and the Company from and against any and all claims, demands, actions, suits, proceedings, assessments, judgments, damages, costs, losses and expenses, including any payment made in good faith in settlement of any claim (subject to the right of Assignor to defend any such claim), resulting from the breach by Assignor of any representation or warranty made under this Agreement or from any misrepresentation in or omission from any certificate or other instrument furnished or to be furnished by Assignor hereunder.

 

Section 2.3 Consideration

 

Assignor represents that good and valuable consideration was paid for the Note No. 2 on or about the original issuance date thereof and that such amount has not been repaid except as otherwise set forth herein.

 

 
 
 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE

 

Assignee hereby represents and warrant in all material respects to Assignor, with the intent that it will rely thereon in entering into this Agreement and in approving and completing the transactions contemplated hereby, that:

 

Section 3.1 Authority; Due Authorization

 

The Assignee has the full right, power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution and delivery by the Assignee of this Agreement, the performance by the Assignee of its obligations hereunder and thereunder, including the delivery of the Closing Deliverables, have been duly and validly authorized by all necessary action in respect thereof. No other proceedings on the part of the Assignee are necessary to authorize the execution and delivery of this Agreement and the performance by the Assignee of its obligations hereunder or thereunder. This Agreement has been, or, when executed will be, duly executed and delivered by the Assignee. This Agreement constitutes valid and binding obligations of the Assignee, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditor's rights generally and to general equitable principles.

 

Section 3.2 Indemnification

 

Assignee agrees to indemnify and save harmless Assignor from and against any and all claims, demands, actions, suits, proceedings, assessments, judgments, damages, costs, losses and expenses, including any payment made in good faith in settlement of any claim (subject to the right of Assignee to defend any such claim), resulting from the breach by Assignee of any representation or warranty made under this Agreement or from any misrepresentation in or omission from any certificate or other instrument furnished or to be furnished by Assignee hereunder.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1 Survival of Representations, Warranties and Agreements

 

The representations, warranties and covenants in this Agreement, including any rights arising out of any breach of such representations and warranties, shall survive the Closing for a period of two years.

 

Section 4.2 Transfer; Successors and Assigns

 

The provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the parties hereto; provided, however, that this Agreement not be assigned in the absence of the prior written consent of both Assignee and Assignor.

 

 
55
 

 

Section 4.3 Governing Law

 

This Agreement and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Florida, without giving effect to principles or conflicts of law.

 

Section 4.4 Counterparts

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature and/or a scan of any such signature into electronic format.

 

Section 4.5 Titles and Subtitles

 

The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

Section 4.6 Notices

 

Except as may be provided herein, all notices, requests, waivers and other communications under this Agreement shall be in writing and shall be conclusively deemed delivered and effective (i) when hand delivered to the other party, (ii) five business days after being sent by registered or certified mail, return receipt requested, postage prepaid, (iii) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, (iv) via electronic mail or (iv) in the case of a facsimile transmission, upon transmission thereof by the sender and the issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error; provided, however, that the sender shall contemporaneously mail a copy of the notice to the addressee by the method provided for in (i) or (ii) above, but such mailing shall in no way alter the time at which the notice sent by facsimile transmission is deemed received, in each case to the intended recipient as set forth below:

 

If to the Assignor, to:

 

BIRCH FIRST ADVISORS LLC  

121 S. Orange Avenue, Ste. 1500

Orlando, Florida 32801

 

If to the Assignee, to:

 

BIRCH FIRST CAPITAL FUND LLC  

c/o Birch First Capital Management LLC

121 S. Orange Avenue, Ste. 1500

Orlando, Florida 32801

 

 
56
 

 

Section 4.8 Fees and Expenses

 

Except as otherwise expressly provided herein, the Assignor and Assignee will each pay their own respective costs and expenses in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, attorneys' fees, accountants' fees and other professional fees and expenses.

 

Section 4.9 Amendments and Waivers

 

Any term of this Agreement may be amended, only in writing signed by the Assignor and the Assignee.

 

Section 4.10 Severability

 

If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms

 

Section 4.11 Delays or Omissions

 

No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

Section 4.12 Entire Agreement

 

This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

 

[SIGNATURE PAGE FOLLOWS]

 

 
57
 

 

IN WITNESS WHEREOF, the Assignor has executed this agreement on the date first stated above.

 

ASSINGOR

 

 

BIRCH FIRST ADVISORS LLC

 
By:

/s/ Pier S. Bjorklund

 

 

Pier S. Bjorklund

 

 

Managing Director

 

 

 

 

ASSIGNEE

 

BIRCH FIRST CAPITAL FUND LLC

 

By:

Birch First Capital Management LLC
Its:

Manager

 
By:

/s/ Pier S. Bjorklund

Pier S. Bjorklund

Managing Director

 

AGREED AND ACCEPTED BY:

 

ISSUER

 

ELITE DATA SERVICES INC.

 
By:

/s/ Charles Rimlinger

Charles Rimlinger

Chief Executive Officer

Dated: May 18, 2016

 

 

58


EXHIBIT 10.72

 

INDEPENDENT CONTRACTOR AGREEMENT

(Dr. James G. Ricketts)

 

This INDEPENDENT CONTRACTOR AGREEMENT (the "Agreement") is made and entered into as of this 18 t h day of May 2016 (the "Effective Date"), by and between ELITE DATA SERVICES INC., a Florida Corporation ("Company"), and DR. JAMES G. RICKETTS, an individual (the "Contractor").

 

1. Engagement. Subject to the terms and conditions of this Agreement, the Company hereby engages the Contractor to perform the services set forth herein, and Contractor hereby accepts such engagement.

 

2. Duties, Term, and Compensation. Contractor's duties, term of engagement, compensation and provisions for payment thereof shall be as set forth in Schedule I, which may be amended in writing from time to time in accordance with Section 22 hereof, or supplemented with subsequent payments for services to be rendered by Contractor and agreed to by the Company, and which collectively are hereby incorporated by reference. During the term of this Agreement, Contractor shall devote as much of its productive time, energy and abilities to the performance of its duties hereunder as is necessary to perform the required duties in a timely and productive manner. The Contractor is expressly free to perform services for other parties while performing services for the Company.

 

3. Expenses. During the term of this Agreement, Contractor shall bill and the Company shall reimburse Contractor for all reasonable and out-of-pocket expenses incurred in connection with the performance of the duties hereunder, such expenditures shall be approved by the Company in writing prior to being incurred by the Contractor.

 

4. Written Reports. The Company may periodically request progress reports be provided by Contractor. The reports shall be written and in such form as is reasonably requested by the Company.

 

5. Independent Contractor. This Agreement shall not render the Contractor or any of its affiliates, an officer, director, employee, partner, agent of, or partner in a joint venture with the Company for any purpose, unless otherwise agreed to in writing by Company. The Contractor is and will remain an independent contractor, as defined in Internal Revenue Service Publication 15-A, in its relationship to the Company. The Company shall not be responsible for any withholding taxes with respect to the Contractor's compensation hereunder. The Contractor shall have no claim against the Company hereunder or otherwise for vacation pay, sick leave, retirement benefits, social security, worker's compensation, health or disability benefits, unemployment insurance benefits, or employee benefits of any kind.

 

6. Inventions. Except as otherwise agreed to by the Company in writing, any and all writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations which Contractor makes, conceives, discovers or develops, either solely or jointly with any other person or persons, whether or not during working hours and whether or not at the request or upon the suggestion of the Company or any of its affiliates, which relate to or are useful in connection with the specific products manufactured and sold by the Company, at any time during the term of this Agreement, shall be the sole and exclusive property of the Company. Contractor shall make full disclosure to the Company of all such writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations and shall, at the Company's request, do everything necessary or desirable to vest the absolute title thereto in the Company. Any and all writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations which Contractor has made, conceived, discovered or developed, either solely or jointly with any other person or persons, prior to the commencement of this Agreement and utilized by Contractor in rendering its duties to the Company are hereby licensed to the Company for use in its operations and for an infinite duration. This license is non-exclusive, and may be assigned without the Contractor's prior written approval by the Company to an affiliate of the Company.

 

 
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7. Confidentiality . Contractor acknowledges that during the performance of its duties and obligations pursuant to this Agreement, Contractor may receive, learn or otherwise become aware of information regarding the Company including without limitation its business methods, strategies, policies, procedures, techniques, research, historical or projected financial information, budgets, trade secrets, or any other confidential information of or relating to or dealing with the business operations, activities or strategies of the Company ("Confidential Information"). Contractor shall not use, disclose or communicate any of Confidential Information other than for the purpose of fulfilling Contractor's duties and obligations under this Agreement. Contractor shall not disclose or communicate Confidential Information, except to those individuals or entities who are directly involved in Contractor's performance under this Agreement, each of such individuals or entities having first agreed, in writing, to be bound by the provisions of this paragraph. All memoranda, notes, lists, records, files documents and other papers and like items (and all copies, extracts and summaries thereof) made or compiled by Contractor or made available to Contractor containing Confidential Information or concerning the business of the Company shall be the Company's property and shall be returned to the Company promptly upon termination of this Agreement or at any other time upon request by the Company. Confidential Information shall not include information (i) known to or owned by Contractor prior to the date of this Agreement, (ii) developed by Contractor independent of the Company, (iii) that was at the time of disclosure to Contractor or thereafter became public acknowledge through no fault or omission of Contractor; or, (iv) was lawfully obtained by Contractor from a third party under no obligation of confidentiality to the Company. For purposes of this paragraph, the term "Contractor" includes without limitation the Contractor and its subsidiaries and their respective officers, directors, employees, consultants, advisors, agents, contractors and subcontractors.

 

8. Non-Solicitation . For a period of twelve (12) months following the termination of this Agreement, the Contractor shall not, for its own benefit or the benefit of any third party, directly or indirectly, induce or attempt to influence any current, former or prospective employee, consultant, contractor, customer, independent contractor, vendor or supplier of the Company or any of its affiliates to terminate, diminish, or not establish an employment or other relationship with the Company or any of its affiliates.

 

9. Right to Injunction. The parties hereto acknowledge that the services to be rendered by the Contractor under this Agreement and the rights and privileges granted to the Company under the Agreement are of a special, unique, unusual, and extraordinary character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated by damages in any action at law, and the breach by the Contractor of any of the provisions of this Agreement will cause the Company irreparable injury and damage. The Contractor expressly agrees that the Company shall be entitled to injunctive and other equitable relief in the event of, or to prevent, a breach of any provision of this Agreement by the Contractor. Resort to such equitable relief, however, shall not be construed to be a waiver of any other rights or remedies that the Company may have for damages or otherwise. The various rights and remedies of the Company under this Agreement or otherwise shall be construed to be cumulative, and no one of them shall be exclusive of any other or of any right or remedy allowed by law.

 

 
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10. Termination . The Company may terminate this Agreement at any time by thirty (30) days' written notice to the Contractor; provided, however, that this Agreement shall terminate immediately upon written notification to the Contractor in the event of Contractor's termination for "Cause." In the event that the Company terminates this Agreement without Cause, Contractor shall continue to receive the payments defined in Schedule I hereto, for period ninety (90) days after the date of termination. Notwithstanding Company's termination rights herein, Contractor may terminate this Agreement at any time by sixty (60) days' written notice to the Company, however, Contractor shall not be entitled to receive any payments beyond the date of termination.

 

11. Termination by Company for Cause . Termination for any of these events shall constitute termination for "Cause":

 

11.1 if the Contractor is convicted of, or enters a plea of nolo contendere (or similar plea) with respect to, any crime or offense, fails or refuses to comply with Company rules, policies, procedures or plan, approved and effective at such time, or express direction of the Company's Board of Directors, commits any act of fraud, personal dishonesty or misappropriation relating to or involving the Company, materially breaches or neglects the any provision of this Agreement, including if Contractor performs its duties in an incompetent manner as may be determined by the Board of Directors in its sole discretion.

 

11.2 if a majority of the unaffiliated directors, if any, determines that the Contractor has violated this Agreement in any respect and, after notice of such violation, the Contractor has failed to cure such violation within 30 days; or

 

11.3 there is entered an order for relief or similar decree or order with respect to the Contractor by a court having competent jurisdiction in an involuntary case under the federal bankruptcy laws as now or hereafter constituted or under any applicable federal or provincial bankruptcy, insolvency or other similar laws; or the Contractor:

 

11.3.1

ceases, or admits in writing its inability, to pay its debts as they become due and payable, or makes a general assignment for the benefit of, or enters into any composition or arrangement with, creditors;

11.3.2

applies for, or consents, by admission of material allegations of a petition or otherwise, to the appointment of a receiver, trustee, assignee, custodian, liquidator or sequestrator, or other similar official, of the Contractor or of any substantial part of its properties or assets, or authorizes such an application or consent, or proceedings seeking such appointment are commenced without such authorization, consent or application against the Contractor and continue undismissed for 60 days;

11.3.3

authorizes or files a voluntary petition in bankruptcy, or applies for or consents, by admission of material allegations of a petition or otherwise, to the application of any bankruptcy, reorganization, arrangement, readjustment of debt, insolvency, dissolution, liquidation or other similar law of any jurisdiction, or authorizes such application or consent, or proceedings to such end are instituted against the Contractor without such authorization, application or consent and are approved as properly instituted and remain undismissed for 60 days or result in adjudication of bankruptcy or insolvency; or

11.3.4

permits or suffers all or any substantial part of its assets to be sequestered or attached by court order and the order remains undismissed for 60 days. If any of the events specified above shall occur, the Contractor shall give prompt written notice thereof to the Board of Directors upon the happening of such event.

 

 
-3-
 

 

11.4 Contractor or any of its affiliates engages in the unauthorized disclosure of Confidential Information and/or provides services for any other client, company or organization other than Company.

 

12. Action Upon Termination . From and after the effective date of termination of this Agreement, except as otherwise specified herein, the Contractor shall not be entitled to compensation for further services, other than reimbursement of appropriately documented and approved expenses incurred by Contractor before the termination of this Agreement, to the extent that Contractor would have been entitled to such reimbursement but for the termination of this Agreement.

 

13. Representations and Warranties.

 

13.1 The Company represents and warrants to the Contractor as follows:

 

13.1.1

The Company is duly organized, validly existing and in good standing under the laws of Florida, has the power to transact the business in which it is now engaged and is duly qualified and in good standing under the laws of each jurisdiction where the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Company and its subsidiaries, taken as a whole. The Company does not do business under any fictitious business name.

13.1.2

The Company has the power and authority to execute, deliver and perform this Agreement and all obligations required and have taken all necessary actions to authorize this Agreement and the execution, delivery and performance of this Agreement and all obligations required. Except as shall have been obtained, no consent of any other person including, without limitation, stockholders and creditors of the Company, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Company in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required. This Agreement has been, and each instrument or document required will be, executed and delivered by a duly authorized officer of the Company, and this Agreement constitutes, and each instrument or document required when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

13.1.3

The execution, delivery and performance of this Agreement and the documents or instruments required will not violate any provision of any existing law or regulation binding on the Company, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Company, or the governing instruments of, or any securities issued by, the Company or of any mortgage, indenture, lease, contract or other Agreement, instrument or undertaking to which the Company is a party or by which the Company or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Company and its subsidiaries, taken as a whole, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertakings.

 

 
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13.2 The Contractor represents and warrants to the Company that:

 

13.2.1

The Contractor is duly organized and/or domiciled, validly existing and in good standing under the laws of Arizona, has the corporate or individual power to transact the business in which it is now engaged and is duly qualified to do business and is in good standing under the laws of each jurisdiction where the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Contractor, taken as a whole. The Contractor does not do business under any fictitious business name.

13.2.2

The Contractor has the corporate or individual power and authority to execute, deliver and perform this Agreement and all obligations required and has taken all necessary corporate action to authorize this Agreement and the execution, delivery and performance of this Agreement and all obligations required. Except as shall have been obtained, no consent of any other person including, without limitation, creditors of the Contractor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Contractor in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required. This Agreement has been and each instrument or document required will be executed and delivered by a duly authorized officer of the Contractor, and this Agreement constitutes, and each instrument or document required when executed and delivered will constitute, the legally valid and binding obligation of the Contractor enforceable against the Contractor in accordance with its terms.

13.2.3

The execution, delivery and performance of this Agreement and the documents or instruments required, will not violate any provision of any existing law or regulation binding on the Contractor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Contractor, or the governing instruments of, or any securities issued by, the Contractor or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Contractor is a party or by which the Contractor or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets, or financial condition of the Contractor and its subsidiaries, taken as a whole, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage indenture, lease, contract or other agreement, instrument or undertaking.

13.2.4

In rendering its duties under this Agreement, the Contractor shall not utilize any invention, discovery, development, improvement, innovation, or trade secret in which it does not, or the Company does not, have a proprietary interest.

 

14. Merger. This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity.

 

 
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15. Successors and Assigns . This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, and permitted assigns.

 

16. Choice of Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

 

17. Arbitration. Any controversies arising out of the terms of this Agreement or its interpretation shall be settled in Orange County, Florida in accordance with the rules of the American Arbitration Association, and the judgment upon award may be entered in any court having jurisdiction thereof.

 

18. Headings. Section headings are not to be considered a part of this Agreement and are not intended to be a full and accurate description of the contents hereof.

 

19. Assignment. Neither the Company nor the Contractor shall assign any of its rights under this Agreement, or delegate the performance of any of its duties hereunder, without the prior written consent of both parties.

 

20. Notices. Any and all notices, demands, or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if personally served, or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice or demand is served personally, notice shall be deemed constructively made at the time of such personal service. If such notice, demand or other communication is given by mail, such notice shall be conclusively deemed given five days after deposit thereof in the United States mail addressed to the party to whom such notice, demand or other communication is to be given as follows:

 

If to the Company:

 

If to the Contractor:

 

 

 

Elite Data Services Inc.

 

Dr. James G. Ricketts

4447 N. Central Expwy., Ste. 110-135 _______________________________________________
Dallas, TX 75205 _______________________________________________
Attn: Chief Executive Officer
Tel: (972) 885-3981 Tel: (______ ) ____________________________________
Email: corp@edscompanies.com_ Email: __________________________________________

 

 
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Any party hereto may change its address for purposes of this paragraph by written notice given in the manner provided above.

 

21. Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by each party or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party will be deemed to constitute a waiver by the party taking such action, or compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

 

22. Entire Understanding. This Agreement represents the entire agreement of the parties hereto with respect to the matters contemplated hereby, and there are no written or oral representations, warranties, understandings or agreements with respect hereto, except as expressly set forth herein.

 

23. Unenforceability of Provisions. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired hereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

24. Counterparts. This Agreement may be executed via facsimile in one or more counterparts and transmitted via facsimile or PDF, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. When counterparts of copies have been executed by all parties, they shall have the same effect as if the signatures to each counterpart or copy were upon the same document and copies of such documents shall be deemed valid as originals.

 

[ S ignatures Follow On Next Page]

 

 
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IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day and year first written above.

 

COMPANY

ELITE DATA SERVICES INC.

A Florida Corporation

By:

/s/ Charles Rimlinger

Charles Rimlinger, Chief Executive Officer

CONTRACTOR

By:

/s/ Dr. James G. Ricketts

Dr. James G. Ricketts, Individually

 

 
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S CHEDULE  I

 

DUTIES, TERM, AND COMPENSATION

 

1. DUTIES . The Company has engaged the Contractor perform services related to overseeing and managing the development and execution of the Company's long-term strategy with a view to creating shareholder value in the capacity of Chairman.

 

The principal role of the Chairman of the Board is to manage and to provide leadership to the Board of Directors of the Company. The Chairman is accountable to the Board and acts as a direct liaison between the Board and the management of the Company, through the Chief Executive Officer ("CEO"). The Chairman acts as the communicator for Board decisions where appropriate.

 

The concept of separation of the role of the Chairman from that of the CEO implies that the Chairman should be independent from management and free from any interest and any business or other relationship which could interfere with the Chairman's independent judgment other than interests resulting from Company shareholdings and remuneration.

 

More specifically, the duties and responsibilities of the Chairman are as follows:

 

 

·

to act as a liaison between management and the Board;

 

·

to provide independent advice and counsel to the CEO;

 

·

to keep abreast generally of the activities of the Company and its management;

 

·

to ensure that the Directors are properly informed and that sufficient information is provided to enable the Directors to form appropriate judgments;

 

·

in concert with the CEO, to develop and set the agendas for meetings of the Board;

 

·

to act as Chair at meetings of the Board;

 

·

to recommend an annual schedule of the date, time and location of Board and Committee meetings;

 

·

to review and sign minutes of Board meetings;

 

·

to sit on other Committees of the Board where appropriate as determined by the Board;

 

·

to call special meetings of the Board where appropriate;

 

·

in concert with the CEO, to determine the date, time and location of the annual meeting of shareholders and to develop the agenda for the meeting;

 

·

to act as Chair at meetings of shareholders;

 

 
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·

to recommend to the Board, after consultation with the Directors, management and the Governance and Nominating Committee, the appointment of members of the Committees of the Board;

 

·

to assess and make recommendations to the Board annually regarding the effectiveness of the Board as a whole, the Committees of the Board and individual Directors;

 

·

to ensure that regularly, upon completion of the ordinary business of a meeting of the Board, the Directors hold discussions without management present.

 

The Board of Directors reserve the right to amend the Duties and Responsibilities set forth in this Schedule I, from time to time, during the Initial Term of this Agreement, as deemed necessary.

 

2. TERM. The term of this Agreement shall begin as of the date hereof ("Effective Date") and shall end on the first anniversary date (the "Initial Term") following the Effective Date unless terminated earlier as provided in this Agreement. Following expiration of the Initial Term, this Agreement shall continue for three (3) successive one (1) year term unless either party shall notify the other at least thirty (30) days prior to the end of the then term that such party is terminating this Agreement.

 

3. COMPENSATION .

 

3.1 Salary. Subject to the terms of this Agreement, as compensation for Contractor's services, the Company shall pay Contractor a monthly fee in cash equal to Five Thousand Dollars (USD $5,000.00) for the Initial Term and Ten Thousand Dollars (USD $10,000.00) for subsequent terms, unless otherwise agreed to in writing by the Board of Directors, to be paid on the 1 s t business day of each month, starting on the date of execution of this Agreement. In the event one or more payments to the Consultant is not made within thirty (30) business days of the due date, then Consultant may elect in writing to require the Company to make such payment in the form of shares of restricted common stock of the Company, pursuant to the terms and conditions of the Company's Stock Option Plan then in effect. Any and all payments due and payable to Consultant in the form of cash and/or stock compensation as set forth hereinabove shall be paid to Consultant and/or assigns.

 

3.2 Stock Option Plan . The Company may, from time to time, enter into supplemental agreements or memorandums in writing with Contractor for the award and payment to Contractor of additional compensation, including increases in the aforesaid salary, bonuses, or stock incentives upon such terms and conditions as the Company shall deem to be in its best interest and in the event of the execution by the Company of any such agreements or memoranda, the right of Contractor to additional compensation or bonuses shall be determined in accordance with applicable provisions thereof, subject, however, to the provisions hereinafter set forth. The amount of any bonus or stock incentive may be increased or decreased and the amount of any additional compensation to be received by Contractor from the Company is within the sole and absolute discretion of the Company's Board of Directors, pursuant the Company's Equity Incentive Stock Plan (the "Stock Plan"), as approved as of August 27, 2015, which gives the Company the right to grant certain stock awards or options to employees, directors and/or consultants of the Company or any of its subsidiaries.

 

3.3 Equity Grant . Due to the potential risks involved related to the duties of the Contractor to be performed on behalf of the Company, and as an inducement to enter into this Agreement, the Contractor and/or assigns shall be issued a total of One Million (1,000,000) shares of Series B Preferred Stock of the Company (the "Series B Preferred") at a per share price of $0.0001, pursuant to the execution of a Subscription Agreement ("Subscription Agreement"), on the terms and conditions substantially in the form annexed hereto as Exhibit A.

 

3.4 Expenses . In addition to the compensation described in Paragraph 3.1. above, Contractor shall be entitled to reimbursement by the Company for all actual, reasonable and direct expenses incurred by him in the performance of his duties hereunder, provided such expenses (i) are business expenses that are properly tax deductible for the Company (ii) were pre-approved by an appropriate officer of the Company and (iii) were otherwise incurred in accordance with the policies and procedures established by the Company from time to time. Contractor shall provide the Company with written documentation of any expenses submitted for reimbursement as required by Company policy and reimbursement for each item of approved expense shall be made within a reasonable time.

 

4. OTHER ENGAGEMENT .

 

In addition to the duties and responsibilities of the Consultant as set forth in Section 1 in this Schedule I, the Consultant (Dr. James G. Ricketts) has agreed to the continuation of his appointment as a member of the Board of Directors of the Company, pursuant to the execution of a Board Member Services Agreement ("Board Services Agreement"), on the terms and conditions substantially in the form annexed hereto as Exhibit B.

 

 
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EXHIBIT A

 

SUBSCRIPTION AGREEMENT

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES DESCRIBED HEREIN.

 

ANY NON-PUBLIC MATERIAL INFORMATION OBTAINED FROM THE COMPANY, IN CONNECTION WITH THE COMPANY, THE SECURITIES, THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT, IS CONFIDENTIAL. BY ACCEPTING SUCH INFORMATION CONTAINED, THE RECIPIENT ACKNOWLEDGES ITS EXPRESS AGREEMENT WITH ELITE DATA SERVICES INC. TO MAINTAIN IN CONFIDENCE SUCH INFORMATION PURSUANT TO SECTION 8 OF THIS SUBSCRIPTION AGREEMENT. ELITE DATA SERVICES INC. HAS CAUSED THESE MATERIALS TO BE DELIVERED TO YOU IN RELIANCE UPON YOUR AGREEMENT TO MAINTAIN THE CONFIDENTIALITY OF THIS INFORMATION AND PURSUANT TO REGULATION FD PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION.

 

THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.

 

ELITE DATA SERVICES INC.

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205

 

Ladies and Gentlemen:

 

The undersigned understands that ELITE DATA SERVICES INC ., a corporation organized under the laws of Florida (the " Company "), is offering an aggregate of 1,000,000 shares of its Series B Preferred Stock (the " Preferred Stock "), par value $0.0001 per share (the " Securities "), at a purchase price of $0.0001 per share (the " Purchase Price ") in a private placement. The undersigned further understands that the offering is being made without registration of the Securities under the Securities Act of 1933, as amended (the " Securities Act "), or any securities law of any state of the United States or of any other jurisdiction, and is being made in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the " Securities Act "), Rule 506 of Regulation D promulgated by the U.S. Securities and Exchange Commission (the " SEC ") under the Securities Act (" Regulation D ").

 

1. Subscription . Subject to the terms and conditions hereof, the undersigned hereby irrevocably subscribes for the Securities set forth in Appendix A hereto for the aggregate purchase price set forth in Appendix A, which is payable as described in Section 4 hereof. The undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this subscription agreement (the " Subscription Agreement ").

 

 
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2. Acceptance of Subscription and Issuance of Securities . It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned at the Closing referred to in Section 3 hereof. Subscriptions need not be accepted in the order received, and the Securities may be allocated among subscribers. Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Securities to any person who is a resident of a jurisdiction in which the issuance of Securities to such person would constitute a violation of the securities, "blue sky" or other similar laws of such jurisdiction (collectively referred to as the " State Securities Laws ").

 

3. The Closing . The closing of the purchase and sale of the Securities (the " Closing ") shall take place at such time and place as the Company may designate by notice to the undersigned.

 

4. Payment for Securities . Payment for the Securities shall be received by the Company from the undersigned by cashier's check or other means approved by the Company at or prior to the Closing, in the amount as set forth in Appendix A hereto. The Company shall deliver certificates representing the Securities to the undersigned at the Closing bearing an appropriate legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.

 

5. Representations and Warranties of the Company . As of the Closing, the Company represents and warrants that:

 

(a) The Company is duly formed and validly existing under the laws of Florida, with full power and authority to conduct its business as it is currently being conducted and to own its assets; and has secured any other authorizations, approvals, permits and orders required by law for the conduct by the Company of its business as it is currently being conducted, and is duly qualified to do business and in good standing in each jurisdiction in which the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. " Material Adverse Effect " means, with respect to any person (including all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures and other entities), a material adverse effect on the business, financial condition, operations, results of operations, assets, customer, supplier or employee relations or future prospects of such person.

 

(b) The Company has all requisite authority and power, authorizations, consents and approvals to enter into and deliver this Subscription Agreement and any other certificate, agreement, document or instrument to be executed and delivered by the Company in connection with the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Subscription Agreement by the Company and the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company. This Subscription Agreement has been duly and validly authorized and approved, executed and delivered by the Company.

 

(c) The Securities have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Subscription Agreement, will be validly issued, fully paid and nonassessable.

 

6. Representations and Warranties of the Undersigned . The undersigned hereby represents and warrants to and covenants with the Company that:

 

 
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(a) General .

 

(i) The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this Subscription Agreement and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will not contravene any law, rule or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.

 

(ii) The undersigned is a resident of, or a corporation or other entity with its principal business address of the place set forth on the signature page hereto and is not acquiring the Securities as a nominee or agent or otherwise for any other person.

 

(iii) The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall have no responsibility therefore.

 

(iv) Neither the execution or delivery by the undersigned of this Subscription Agreement to which the undersigned is a party, nor the consummation or performance by the undersigned of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of the undersigned (if the undersigned is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which the undersigned is a party or by which the properties or assets of the undersigned are bound; or (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of the undersigned under, or alter the obligations of any person under, or create in any person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a governmental authority or any other person) pursuant to, or result in the creation of a lien on any of the assets or properties of the undersigned under, any note, bond, mortgage, indenture, contract, lease, license, permit, franchise or other instrument or obligation to which the undersigned is a party or any of the undersigned's assets and properties are bound or affected.

 

(v) There is no action pending against, or to the knowledge of the undersigned, threatened against or affecting, the undersigned by any governmental authority or other person with respect to the undersigned that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Subscription Agreement.

 

(b) No Brokers or Finders . No person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the undersigned for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of the undersigned and the undersigned will indemnify and hold the Company and its affiliates harmless against any liability or expense arising out of, or in connection with, any such claim.

 

 
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(c) Investment Representations . The undersigned severally, and not jointly, hereby represents and warrants, solely with respect to itself and not any other investor, to the Company as follows:

 

(i ) Purchase Entirely for Own Account . The undersigned is acquiring such the Securities proposed to be acquired hereunder for investment for its own account and not with a view to the resale or distribution of any part thereof, and the undersigned has no present intention of selling or otherwise distributing such Securities, except in compliance with applicable securities laws.

 

(ii) Restricted Securities . The undersigned understands that the Securities are characterized as "restricted securities" under the Securities Act inasmuch as this Subscription Agreement contemplates that, if acquired by the shareholder pursuant hereto, the Securities would be acquired in a transaction not involving a public offering. The issuance of the Securities hereunder is being effected in reliance upon an exemption from registration afforded Regulation D and/or Regulation S. The undersigned further acknowledges that if the Securities are issued to the undersigned in accordance with the provisions of this Subscription Agreement, such Securities may not be resold without registration under the Securities Act or the existence of an exemption therefrom. The undersigned represents that he is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act

 

(iii) Acknowledgment of Non-Registration . The undersigned understands and agrees that the Securities to be issued pursuant to this Subscription Agreement have not been registered under the Securities Act or the securities laws of any state of the United States of America (the " U.S. ").

 

(iv) Status . By its execution of this Subscription Agreement, the undersigned represents and warrants to the Company as indicated on its signature page to this Subscription Agreement, that the undersigned is, and will be at the Closing, an Accredited Investor (as defined below). The undersigned understands that the Securities are being offered and sold to the undersigned in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the undersigned set forth in this Subscription Agreement, in order that the Company may determine the applicability and availability of the exemptions from registration of the Securities on which the Company is relying.

 

(v) Additional Representations and Warranties . The undersigned, severally and not jointly, further represents and warrants to the Company as follows: (i) such person qualifies as an Accredited Investor (as defined below); (ii) such person consents to the placement of a legend on any certificate or other document evidencing the Securities substantially in the form set forth in Section 6(d) ; (iii) such person has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person's or entity's interests in connection with the transactions contemplated by this Subscription Agreement; (iv) such person has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Securities and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Securities; (v) such person has had access to the SEC Reports; (vi) such person has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Company that such person has requested and all such public information is sufficient for such person to evaluate the risks of investing in the Securities; (vii) such person has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Securities; (viii) such person is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in this Subscription Agreement or the SEC Reports; (ix) such person will not sell or otherwise transfer the Securities, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available; (x) such person understands and acknowledges that the Company is under no obligation to register the Securities for sale under the Securities Act; (xi) such person understands and acknowledges that the Securities have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such person and that any representation to the contrary is a criminal offense; and (xii) such person acknowledges that the representations, warranties and agreements made by such person herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Securities. " Accredited Investor " has the meaning set forth in Rule 501 under the Securities Act.

 

 
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(vi) Opinion . The undersigned will not transfer any or all of the undersigned's Securities pursuant to Regulation D or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of the undersigned's Securities, without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be made in compliance with Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws

 

(vii) Consent . The undersigned understands and acknowledges that the Company may refuse to transfer the Securities, unless the undersigned complies with Section 6(d) and any other restrictions on transferability set forth herein. The undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company's preferred stock in order to implement the restrictions on transfer of the Securities.

 

(d) Stock Legends . The undersigned hereby agrees with the Company as follows:

 

(i ) The certificates evidencing the Securities issued to the undersigned who is Accredited Investors, and each certificate issued in transfer thereof, will bear the following or similar legend:

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS HEREIN, IN THE SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, AND UPON FORECLOSURE OR TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS CONTAINED HEREIN, IN THE SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.]

 

(i) Other Legends . The certificates representing such Securities, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable law, including, without limitation, any state corporate and state securities law, or contract.

 

(ii) Residency; Foreign Securities Laws . The undersigned acknowledges that the Company makes no representation or warranty that any Securities issued outside of the U.S. have been offered or sold in compliance with the laws of the jurisdiction into which such Securities were issued. The undersigned warrants to the Company that no filing is required by the Company with any governmental authority in the undersigned's jurisdiction in connection with the transactions contemplated hereby. The undersigned has satisfied itself as to the full observance of the laws of its jurisdiction in connection with the acquisition of the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The undersigned's acquisition of and payment for, and its continued ownership of the Securities, will not violate any applicable securities or other laws of his, her or its jurisdiction.

 

(e) Disclosure . No representation or warranty of the undersigned contained in this Subscription Agreement and no statement or disclosure made by or on behalf of the undersigned to the Company or any of its Subsidiaries pursuant to this Subscription Agreement herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

 

 
-15-
 

 

(f) Non-reliance .

 

(i) The undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations related to the terms and conditions of the Securities and the other transaction documents shall not be considered investment advice or a recommendation to purchase the Securities.

 

(ii) The undersigned confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) an of investment in the Securities or (B) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations. In deciding to purchase the Securities, the undersigned is not relying on the advice or recommendations of the Company and the undersigned has made its own independent decision that the investment in the Securities is suitable and appropriate for the undersigned.

 

7. Conditions to Obligation of the Undersigned and the Company .

 

(a) Conditions to Obligation of the Undersigned . The obligations of the undersigned to enter into and perform their respective obligations under this Subscription Agreement are subject, at the option of the undersigned, to the fulfillment on or prior to the Closing of the following conditions, any one or more of which may be waived by the undersigned in writing:

 

(i) The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the Closing (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);

 

(ii) No event, change or development shall exist or shall have occurred since the date of this Agreement that has had or is reasonably likely to have a Material Adverse Effect on the Company; and

 

(iii) The Company shall have duly executed and delivered to the undersigned this Subscription Agreement.

 

(c) Conditions to Obligation of the Company. The obligations of the Company to enter into and perform its obligations under this Subscription Agreement are subject, at the option of the Company, to the fulfillment on or prior to the Closing of the following conditions, any one or more of which may be waived by the Company:

 

(i) The representations and warranties of the undersigned set forth in this Subscription Agreement shall be true and correct in all material respects as of the Closing (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date); and

 

 
-16-
 

 

(ii) The undersigned shall have executed this Subscription Agreement to which it is a party and completed its investor questionnaire substantially in form attached hereto as Exhibit A and delivered the same to the Company.

 

8. Confidentiality . The undersigned shall maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other, non-public material information obtained from the Company in connection with the Company, the Securities, this Subscription Agreement or the transactions contemplated by this Subscription Agreement, unless (a) such information becomes publicly available through no fault of such Party, or (b) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

 

9. Waiver, Amendment . Neither this Subscription Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.

 

10. Assignability . Neither this Subscription Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party.

 

11. Waiver of Jury Trial . THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.

 

12. Submission to Jurisdiction . With respect to any suit, action or proceeding relating to any offers, purchases or sales of the Securities by the undersigned, the undersigned irrevocably submits to the jurisdiction of the federal or state courts located in the State of New York which submission shall be exclusive unless none of such courts has lawful jurisdiction over such proceedings.

 

13. Governing Law . This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

 

14.  Section and Other Headings . The section and other headings contained in this Subscription Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Subscription Agreement.

  

15. Counterparts . This Subscription Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

16. Notices . All notices (including change of addresses) and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party shall have specified by notice in writing to the other):

 

 
-17-
 

 

If to the Company:

ELITE DATA SERVICES INC.

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205

Attn: Chief Executive Officer

Telephone No.: (972) 885-3981

Email: corp@edscompanies.com

 

17. Binding Effect . The provisions of this Subscription Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

18. Survival . All representations, warranties and covenants contained in this Subscription Agreement shall survive (i) the acceptance of the subscription by the Company and (ii) the death or disability of the undersigned.

 

19. Notification of Changes . The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Securities pursuant to this Subscription Agreement which would cause any representation, warranty, or covenant of the undersigned contained in this Subscription Agreement to be false or incorrect.

 

20. Severability . If any term or provision of this Subscription Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Subscription Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

[SIGNATURE PAGE FOLLOWS]

 

 
-18-
 

 

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 18 t h day of May, 2016.

 

PURCHASER (if an individual):

PURCHASER (if an entity):

 

By:

/s/ Dr. James G. Ricketts

 

Dr. James G. Ricketts

Legal Name of Entity

Individually

By:
Name:
Title:

Address:

 

Place of Domicile or Formation: Arizona, U.S.

 

Aggregate Subscription Amount: US$ 100.00

 

The offer to purchase Securities as set forth above is confirmed and accepted by the Company as to 1,000,000 shares of its Series B Preferred Stock.

 

ELITE DATA SERVICES INC.

 

By:

/s/ Charles Rimlinger

Charles Rimlinger,

Chief Executive Officer

 

 
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APPENDIX A

 

CONSIDERATION TO BE DELIVERED

 

Securities to
Be Acquired

Purchase
Price

Aggregate Purchase
Price to be Paid

1,000,0000 shares of the Company's eries B Preferred Stock

US$ 0.0001 per share

US$ 100.00

 

 

 

 

 

 

 
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EXHIBIT A

 

INVESTOR QUESTIONNAIRE

 

See Attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
-21-
 

 

EXHIBIT B

 

BOARD MEMBER SERVICES AGREEMENT

 

ELITE DATA SERVICES INC.

(Dr. James G. Ricketts)

 

This Board of Directors Services Agreement (the "Agreement"), dated May 18, 2016, is entered into between ELITE DATA SERVICES INC. , a Florida corporation ("the Company), and D R. JAMES G. RICKETTS , an individual with a principal place of residence in Scottsdale, Arizona (the "Director").

 

WHEREAS, the Company desires to retain the services of Director for the benefit of the Company and its stockholders; and

 

WHEREAS, Director desires to continue to serve on the Company's Board of Directors for the period of time and subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, for consideration and as set forth herein, the parties hereto agree as follows:

 

1. Board Duties . Director agrees to provide services to the Company as a member of the Board of Directors. Director shall, for so long as he remains a member of the Board of Directors, but in any case not less than one year from the date hereof, meet with the Company upon written request, at dates and times mutually agreeable to Director and the Company, to discuss any matter involving the Company or its Subsidiaries, which involves or may involve issues of which Director has knowledge and cooperate in the review, defense or prosecution of such matters. Director acknowledges and agrees that the Company may rely upon Director's expertise in business disciplines where Director has a deep understanding with respect to the Company's business operations and that such requests may require substantial additional time and efforts in addition to Director's customary service as a member of the Board of Directors. Director will notify the Company promptly if he is subpoenaed or otherwise served with legal process in any matter involving the Company or its subsidiaries. Director will notify the Company if any attorney who is not representing the Company contacts or attempts to contact Director (other than Director's own legal counsel) to obtain information that in any way relates to the Company or its Subsidiaries, and Director will not discuss any of these matters with any such attorney without first so notifying the Company and providing the Company with an opportunity to have its attorney present during any meeting or conversation with any such attorney.

 

2. Compensation. As compensation for the services provided herein, the Company shall pay to Director a fee in an amount equal Ten Thousand Dollars (USD $10,000), in the form of cash and/or equity, in the form of shares of restricted common stock of the Company, pursuant to the terms and conditions of the Company's Stock Option Plan effective as of August 27, 2015, at Company's sole discretion, paid over a period of one year from the date hereof. Payments in cash and/or equity shall be made to Director on a quarterly basis on the first day of the month proceeding each quarter, unless otherwise mutually agreed to, as long as Director continues to fulfill his duties and provide the services set forth above. Director shall be entitled to receive any unpaid compensation through the date of this Agreement, together with any other vested or un-vested benefits in accordance with the terms of any applicable Company stock option plans or arrangements.

 

 
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3. Benefits and Expenses. The Company currently offers no benefits to its Board of Directors, however, if the Company decides to do so in the future, the Company shall provide such benefits on the same terms as provided to the senior executives of the Company for as long as Director continues to provide the services contemplated hereby. The Company will reimburse Director for reasonable business expenses incurred on behalf of the Company prior to the date hereof. The Company shall also reimburse Director for reasonable out-of-pocket expenses incurred in connection with discharging his duties as a Board member. Any additional expenses shall be pre-approved by the CEO or CFO of the Company and will be reimbursed subject to receiving reasonable substantiating documentation relating to such expenses.

 

4. Mutual Non-Disparagement . Director and the Company mutually agree to forbear from making, causing to be made, publishing, ratifying or endorsing any and all disparaging remarks, derogatory statements or comments made to any party with respect to either of them. Further, the parties hereto agree to forbear from making any public or non-confidential statement with respect to the any claim or complain against either party without the mutual consent of each of them, to be given in advance of any such statement.

 

5. Cooperation. In the event of any claim or litigation against the Company and/or Director based upon any alleged conduct, acts or omissions of Director during the tenure of Director as an officer of the Company, whether known or unknown, threatened or not as of the time of this writing, the Company will cooperate with Director and provide to Director such information and documents as are necessary and reasonably requested by Director or his counsel, subject to restrictions imposed by federal or state securities laws or court order or injunction. The Company shall cooperate in all respects to ensure that Director has access any and all available insurance coverage and shall do nothing to damage Director's status as an insured, and shall provide all necessary information for Director to make or tender any claim under applicable coverage.

 

6. Indemnification. In order to induce Director to provide, or continue to provide, services to the Company, the Company wishes to provide for the indemnification of, and advancement of expenses to, Director to the maximum extent permitted by law, on the terms and conditions set forth in the Indemnification Agreement, attached thereto as Exhibit A.

 

7. Board of Directors Status of Director. Director's membership on the Company Board of Directors shall not be disturbed for at least the greater of any period of time: (a) specified in any other agreement or contract defining Director's role as a member of the Board of Directors, (b) a period of three years from the date hereof, (c) so long as Director owns, directly or indirectly, at least 10% of the issued or outstanding equity stock in the Company, or (d) as otherwise set forth in the Company by-laws. Membership on the Board shall require adherence to board member conduct policies adopted by the board and enforced equally upon all directors. Director may voluntarily resign his position on the Board of Directors at any time and without penalty or liability of any kind, subject to Section 2 above.

 

8. Confidentiality. Subject to exceptions mutually agreed upon by the parties to this Agreement in advance and in writing, the terms and conditions of this Agreement shall remain confidential and protected from disclosure except as required by law in connection with any registration or filing, in relation to a lawful subpoena, or as may be necessary for purposes of disclosure to accountants, financial advisors or other experts, who shall be made aware of and agree to be bound by the confidentiality provisions hereof.

 

9. Governing Law. This Agreement shall be governed by the law of the State of Florida. In the event of any dispute regarding the performance or terms hereof, the prevailing party in any litigation shall be entitled to an award of reasonable attorneys' fees and costs of suit, together with any other relief awarded hereunder or in accordance with governing law.

 

 
-23-
 

 

IN WITNESS WHEREOF, the parties hereto enter into this Agreement as of the date first set forth above.

 

COMPANY

DIRECTOR

ELITE DATA SERVICES INC.

By:

/s/ Charles Rimlinger

By:

/s/ Dr. James G. Ricketts

Charles Rimlinger

Dr. James G. Ricketts

Chief Executive Officer

Individually

 

 
-24-
 

 

EXHIBIT A

 

Indemnification Agreement

 

ELITE DATA SERVICES INC.

 

This Indemnification Agreement (this " Agreement ") is made as of May 18, 2016, by and between ELITE DATA SERVICES INC., a Florida corporation (the " Company "), and DR. JAMES G. RICKETTS (" Indemnitee ").

 

RECITALS

 

The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee may not be willing to continue to serve in Indemnitee's current capacity with the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.

 

AGREEMENT

 

In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:

 

1. Indemnification .

 

(a) Third-Party Proceedings . To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in the Company's favor), against all Expenses, judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful.

 

 
-25-
 

 

(b) Proceedings By or in the Right of the Company . To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in the Company's favor, against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

 

(c) Success on the Merits . To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters to the fullest extent permitted by applicable law. If any Proceeding is disposed of on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respect to any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee's conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.

 

(d) Witness Expenses . To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding.

 

2. Indemnification Procedure .

 

(a) Advancement of Expenses . To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statement requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall be unsecured and interest free and shall be made without regard to Indemnitee's ability to repay the Expenses and without regard to Indemnitee's ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled to continue to receive advancement of Expenses pursuant to this Section 2(a) unless and until the matter of Indemnitee's entitlement to indemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify for advances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repayment of advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than the execution of this Agreement.

 

(b) Notice and Cooperation by Indemnitee . Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for which indemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of, and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 13(e) below. In addition, Indemnitee shall give the Company such additional information and cooperation as the Company may reasonably request. Indemnitee's failure to so notify, provide information and otherwise cooperate with the Company shall not relieve the Company of any obligation that it may have to Indemnitee under this Agreement, except to the extent that the Company is adversely affected by such failure.

 

 
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(c) Determination of Entitlement .

 

(i ) Final Disposition . Notwithstanding any other provision in this Agreement, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

(ii) Determination and Payment . Subject to the foregoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, to the extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth in Florida General Corporation Law. The Company shall pay any claims made under this Agreement, under any statute, or under any provision of the Company's Certificate of Incorporation or Bylaws providing for indemnification or advancement of Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claim is not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against the Company in the Florida Courts to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shall also be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(a)) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption with clear and convincing evidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful. In addition, it is the parties' intention that if the Company contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement to indemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisite determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

 

(iii) Change of Control . Notwithstanding any other provision in this Agreement, if a Change of Control has occurred, any person or body appointed by the Board of Directors in accordance with applicable law to review the Company's obligations hereunder and under applicable law shall be Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, will render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Counsel in connection with all matters concerning a single Indemnitee, and such Independent Counsel shall be the Independent Counsel for any or all other Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Counsel representing other indemnitees under agreements similar to this Agreement.

 

 
-27-
 

 

(d) Payment Directions . To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee's request (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses.

 

(e) Notice to Insurers . If, at the time of the receipt of a notice of a claim pursuant to Section 2(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

(f) Defense of Claim and Selection of Counsel . In the event the Company shall be obligated under Section 2(a) hereof to advance Expenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. In addition, if there exists a potential, but not an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred by Indemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee's defense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to be Expenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether such conflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Company shall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend if the Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required to obtain Indemnitee's prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (1) does not grant Indemnitee a complete release of liability, (2) would impose any penalty or limitation on Indemnitee, or (3) would admit any liability or misconduct by Indemnitee.

 

3. Additional Indemnification Rights .

 

(a) Scope . Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Florida corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee's rights and the Company's obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Florida corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties' rights and obligations hereunder.

 

 
-28-
 

 

(b) Nonexclusivity . The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company's Board of Directors, the Florida General Corporation Law, or otherwise, both as to action in Indemnitee's official capacity and as to action in another capacity while holding such office.

 

(c) Interest on Unpaid Amounts . If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90) days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company to Indemnitee at the legal rate under Florida law for amounts which the Company indemnifies or is obligated to indemnify for the period commencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement and ending with the date on which such payment is made to Indemnitee by the Company.

 

(d) Information Sharing . If Indemnitee is the subject of or is implicated in any way during an investigation, whether formal or informal, the Company shall share with Indemnitee any information the Company has furnished to any third parties concerning the investigation provided that, at the time such information is so furnished to such third party, Indemnitee continues to serve in one or more capacities giving rise to the Company's indemnification obligations under Section 1.

 

(e) Third-Party Indemnification . The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the " Third-Party Indemnitors "). The Company hereby agrees that it is the indemnitor of first resort ( i.e., its obligations to Indemnitee are primary and any obligation of the Third-Party Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), and that the Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Third-Party Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Third-Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company if the Third-Party Indemnitors had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Third-Party Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Third-Party Indemnitors shall have a right of contribution by the Company to the Third-Party Indemnitors with respect to any advance or payment by the Third- Party Indemnitors to or on behalf of the Indemnitee.

 

(f) Indemnification of Control Person . If (i) Indemnitee is or was affiliated with one or more of the Company's current or former stockholders that may be deemed to be or to have been a controlling person of the Company (each a " Control Person "), (ii) a Control Person is, or is threatened to be made, a party to or a participant (including as a witness) in any proceeding, and (iii) the Control Person's involvement in the proceeding is related to Indemnitee's service to the Company as a director of the Company, or arises from the Control Person's status or alleged status as a controlling person of the Company resulting from such Control Person's affiliation with Indemnitee, then the Control Person shall be entitled to all of the indemnification rights and remedies under this Agreement to the same extent as Indemnitee.

 

4. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines and amounts paid in settlement to which Indemnitee is entitled.

 

 
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5. Director and Officer Liability Insurance .

 

(a) D&O Policy . The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors and officers of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.

 

(b) Tail Coverage . In the event of a Change of Control or the Company's becoming insolvent (including being placed into receivership or entering the federal bankruptcy process and the like), the Company shall use best efforts to maintain in force any and all insurance policies then maintained by the Company in providing insurance (directors' and officers' liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter.

 

6. Severability . Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

 

7. Exclusions . Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

 

(a) Claims Initiated by Indemnitee . To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Florida General Corporation Law, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of this subsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary or advisable in support of Indemnitee's defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party;

 

 
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(b) Lack of Good Faith . To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Florida General Corporation Law, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;

 

(c) Insured Claims . To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by an insurance carrier under an insurance policy maintained by the Company; or

 

(d) Certain Exchange Act Claims . To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the " Sarbanes-Oxley Act ") or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicable law and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually and reasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject to indemnification hereunder.

 

8.  Contribution Claims .

 

(a) If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason other than those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b) With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may be brought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable with Indemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceeding had been brought against Indemnitee.

 

9. No Imputation . The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement.

 

 
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10. Determination of Good Faith . For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board of Directors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensation consultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.

 

11. Defined Terms and Phrases . For purposes of this Agreement, the following terms shall have the following meanings:

 

(a) " Beneficial Owner " and " Beneficial Ownership " shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act as in effect on the date hereof.

 

(b) " Change of Control " shall be deemed to occur upon the earliest of any of the following events:

 

(i ) Acquisition of Stock by Third Party . Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing [20-50]% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors and such acquisition would not constitute a Change of Control under part (iii) of this definition.

 

(ii) Change in Board of Directors . Individuals who, as of the date of this Agreement, constitute the Company's Board of Directors (the " Board "), and any new director whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date of this Agreement (collectively, the " Continuing Directors "), cease for any reason to constitute at least a majority of the members of the Board.

 

(iii) Corporate Transaction . The effective date of a reorganization, merger, or consolidation of the Company (a " Business Combination "), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors and with the power to elect at least a majority of the Board or other governing body of the surviving entity; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination.

 

 
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(iv) Liquidation . The approval by the Company's stockholders of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company's assets, other than factoring the Company's current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale or disposition in one transaction or a series of related transactions).

 

(v) Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under the Exchange Act whether or not the Company is then subject to such reporting requirement.

 

(c) " Company " shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

 

(d) " Enterprise " means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent.

 

(e) " Exchange Act " means the Securities Exchange Act of 1934, as amended.

 

(f) " Expenses " shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys' fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement (including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to the imposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expenses incurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costs relating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessment or other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

 
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(g) " Independent Counsel " means an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(c)(iii), who will not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

 

(h) " Person " shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that "Person" shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) any employee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporation owned, directly or indirectly, by the Company's stockholders in substantially the same proportions as their ownership of stock of the Company (an " Employee Benefit Plan "); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.

 

(i ) " Proceeding " shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by a third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee's part while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement.

 

(j ) In addition, references to " other enterprise " shall include another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise; references to " fines " shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; references to " serving at the request of the Company " shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner " not opposed to the best interests of the Company " as referred to in this Agreement; references to " include " or " including " shall mean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this Agreement unless otherwise specified.

 

12. Attorneys' Fees . In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such Proceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous.

 

 
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13. Miscellaneous .

 

(a) Governing Law . The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Florida, without giving effect to principles of conflicts of law.

 

(b) Entire Agreement; Binding Effect . Without limiting any of the rights of Indemnitee described in Section 3(b), this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions and supersedes any and all previous agreements between them covering the subject matter herein. The indemnification provided under this Agreement applies with respect to events occurring before or after the effective date of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company in any and all indemnified capacities.

 

(c) Amendments and Waivers . No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

 

(d) Successors and Assigns . This Agreement shall be binding upon the Company and its successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, and inure to the benefit of Indemnitee and Indemnitee's heirs, executors, administrators, legal representatives and assigns. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e) Notices . Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company's books and records.

 

(f) Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

 
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(g) Construction . This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

(h) Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

(i ) No Employment Rights . Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

 

(j) Company Position . The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcing or interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

 

(k) Subrogation . [Subject to Section 3(e), in] the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.

 

[ S ignature Page Follows]

 

 
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The parties have executed this Agreement as of the date first set forth above.

 

THE COMPANY:

 

ELITE DATA SERVICES INC.

 

By:

/s/ Charles Rimlinger

 

Charles Rimlinger

Chief Executive Officer

 

ADDRESS:

 

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205

Email: corp@edscompanies.com

 

AGREED TO AND ACCEPTED:

INDEMNITEE:

By:

/s/ Dr. James G. Ricketts

 

Dr. James G. Ricketts

Individually

ADDRESS:

 

 

 

 

 

 

Phone:

 

Email:

 

 

 

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EXHIBIT 10.73

 

INDEPENDENT CONTRACTOR AGREEMENT

 

(Stephen Antol)

 

This INDEPENDENT CONTRACTOR AGREEMENT (the "Agreement") is made and entered into as of this 18th day of May 2016 (the "Effective Date"), by and between ELITE DATA SERVICES INC., a Florida Corporation ("Company"), and STEPHEN ANTOL, an individual (collectively referred to as the "Contractor").

 

1. Engagement. Subject to the terms and conditions of this Agreement, the Company hereby engages the Contractor to perform the services set forth herein, and Contractor hereby accepts such engagement.

 

2. Duties, Term, and Compensation. Contractor's duties, term of engagement, compensation and provisions for payment thereof shall be as set forth in Schedule I, which may be amended in writing from time to time in accordance with Section 22 hereof, or supplemented with subsequent payments for services to be rendered by Contractor and agreed to by the Company, and which collectively are hereby incorporated by reference. During the term of this Agreement, Contractor shall devote as much of its productive time, energy and abilities to the performance of its duties hereunder as is necessary to perform the required duties in a timely and productive manner. The Contractor is expressly free to perform services for other parties while performing services for the Company.

 

3. Expenses. During the term of this Agreement, Contractor shall bill and the Company shall reimburse Contractor for all reasonable and out-of-pocket expenses incurred in connection with the performance of the duties hereunder, such expenditures shall be approved by the Company in writing prior to being incurred by the Contractor.

 

4. Written Reports. The Company may periodically request progress reports be provided by Contractor. The reports shall be written and in such form as is reasonably requested by the Company.

 

5. Independent Contractor. This Agreement shall not render the Contractor or any of its affiliates, an officer, director, employee, partner, agent of, or partner in a joint venture with the Company for any purpose, unless otherwise agreed to in writing by Company. The Contractor is and will remain an independent contractor, as defined in Internal Revenue Service Publication 15-A, in its relationship to the Company. The Company shall not be responsible for any withholding taxes with respect to the Contractor's compensation hereunder. The Contractor shall have no claim against the Company hereunder or otherwise for vacation pay, sick leave, retirement benefits, social security, worker's compensation, health or disability benefits, unemployment insurance benefits, or employee benefits of any kind.

 

6. Inventions. Except as otherwise agreed to by the Company in writing, any and all writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations which Contractor makes, conceives, discovers or develops, either solely or jointly with any other person or persons, whether or not during working hours and whether or not at the request or upon the suggestion of the Company or any of its affiliates, which relate to or are useful in connection with the specific products manufactured and sold by the Company, at any time during the term of this Agreement, shall be the sole and exclusive property of the Company. Contractor shall make full disclosure to the Company of all such writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations and shall, at the Company's request, do everything necessary or desirable to vest the absolute title thereto in the Company. Any and all writings, inventions, discoveries, formulations, improvements, processes, procedures, techniques, developments and innovations which Contractor has made, conceived, discovered or developed, either solely or jointly with any other person or persons, prior to the commencement of this Agreement and utilized by Contractor in rendering its duties to the Company are hereby licensed to the Company for use in its operations and for an infinite duration. This license is non-exclusive, and may be assigned without the Contractor's prior written approval by the Company to an affiliate of the Company.

 

1

 

7. Confidentiality . Contractor acknowledges that during the performance of its duties and obligations pursuant to this Agreement, Contractor may receive, learn or otherwise become aware of information regarding the Company including without limitation its business methods, strategies, policies, procedures, techniques, research, historical or projected financial information, budgets, trade secrets, or any other confidential information of or relating to or dealing with the business operations, activities or strategies of the Company ("Confidential Information"). Contractor shall not use, disclose or communicate any of Confidential Information other than for the purpose of fulfilling Contractor's duties and obligations under this Agreement. Contractor shall not disclose or communicate Confidential Information, except to those individuals or entities who are directly involved in Contractor's performance under this Agreement, each of such individuals or entities having first agreed, in writing, to be bound by the provisions of this paragraph. All memoranda, notes, lists, records, files documents and other papers and like items (and all copies, extracts and summaries thereof) made or compiled by Contractor or made available to Contractor containing Confidential Information or concerning the business of the Company shall be the Company's property and shall be returned to the Company promptly upon termination of this Agreement or at any other time upon request by the Company. Confidential Information shall not include information (i) known to or owned by Contractor prior to the date of this Agreement, (ii) developed by Contractor independent of the Company, (iii) that was at the time of disclosure to Contractor or thereafter became public acknowledge through no fault or omission of Contractor; or, (iv) was lawfully obtained by Contractor from a third party under no obligation of confidentiality to the Company. For purposes of this paragraph, the term "Contractor" includes without limitation the Contractor and its subsidiaries and their respective officers, directors, employees, consultants, advisors, agents, contractors and subcontractors.

 

8. Non-Solicitation . For a period of twelve (12) months following the termination of this Agreement, the Contractor shall not, for its own benefit or the benefit of any third party, directly or indirectly, induce or attempt to influence any current, former or prospective employee, consultant, contractor, customer, independent contractor, vendor or supplier of the Company or any of its affiliates to terminate, diminish, or not establish an employment or other relationship with the Company or any of its affiliates.

 

9. Right to Injunction. The parties hereto acknowledge that the services to be rendered by the Contractor under this Agreement and the rights and privileges granted to the Company under the Agreement are of a special, unique, unusual, and extraordinary character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated by damages in any action at law, and the breach by the Contractor of any of the provisions of this Agreement will cause the Company irreparable injury and damage. The Contractor expressly agrees that the Company shall be entitled to injunctive and other equitable relief in the event of, or to prevent, a breach of any provision of this Agreement by the Contractor. Resort to such equitable relief, however, shall not be construed to be a waiver of any other rights or remedies that the Company may have for damages or otherwise. The various rights and remedies of the Company under this Agreement or otherwise shall be construed to be cumulative, and no one of them shall be exclusive of any other or of any right or remedy allowed by law.

 

10. Termination . The Company may terminate this Agreement at any time by thirty (30) days' written notice to the Contractor; provided, however, that this Agreement shall terminate immediately upon written notification to the Contractor in the event of Contractor's termination for "Cause." In the event that the Company terminates this Agreement without Cause, Contractor shall continue to receive the payments defined in Schedule I hereto, for period ninety (90) days after the date of termination. Notwithstanding Company's termination rights herein, Contractor may terminate this Agreement at any time by sixty (60) days' written notice to the Company, however, Contractor shall not be entitled to receive any payments beyond the date of termination.

 

2

 

11. Termination by Company for Cause . Termination for any of these events shall constitute termination for "Cause":

 

11.1

if the Contractor or any of its affiliates is convicted of, or enters a plea of nolo contendere (or similar plea) with respect to, any crime or offense, fails or refuses to comply with Company rules, policies, procedures or plan, approved and effective at such time, or express direction of the Company's Board of Directors, commits any act of fraud, personal dishonesty or misappropriation relating to or involving the Company, materially breaches or neglects the any provision of this Agreement, including if Contractor or any of its affiliates performs its duties in an incompetent manner as may be determined by the Board of Directors in its sole discretion.

11.2

if a majority of the unaffiliated directors, if any, determines that the Contractor has violated this Agreement in any respect and, after notice of such violation, the Contractor has failed to cure such violation within 30 days; or

11.3

there is entered an order for relief or similar decree or order with respect to the Contractor by a court having competent jurisdiction in an involuntary case under the federal bankruptcy laws as now or hereafter constituted or under any applicable federal or provincial bankruptcy, insolvency or other similar laws; or the Contractor:

 

11.3.1

ceases, or admits in writing its inability, to pay its debts as they become due and payable, or makes a general assignment for the benefit of, or enters into any composition or arrangement with, creditors;

11.3.2

applies for, or consents, by admission of material allegations of a petition or otherwise, to the appointment of a receiver, trustee, assignee, custodian, liquidator or sequestrator, or other similar official, of the Contractor or of any substantial part of its properties or assets, or authorizes such an application or consent, or proceedings seeking such appointment are commenced without such authorization, consent or application against the Contractor and continue undismissed for 60 days;

11.3.3

authorizes or files a voluntary petition in bankruptcy, or applies for or consents, by admission of material allegations of a petition or otherwise, to the application of any bankruptcy, reorganization, arrangement, readjustment of debt, insolvency, dissolution, liquidation or other similar law of any jurisdiction, or authorizes such application or consent, or proceedings to such end are instituted against the Contractor without such authorization, application or consent and are approved as properly instituted and remain undismissed for 60 days or result in adjudication of bankruptcy or insolvency; or

 

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11.3.4

permits or suffers all or any substantial part of its assets to be sequestered or attached by court order and the order remains undismissed for 60 days. If any of the events specified above shall occur, the Contractor shall give prompt written notice thereof to the Board of Directors upon the happening of such event.

 

11.4

Contractor or any of its affiliates engages in the unauthorized disclosure of Confidential Information and/or provides services for any other client, company or organization other than Company.

 

12. Action Upon Termination . From and after the effective date of termination of this Agreement, except as otherwise specified herein, the Contractor shall not be entitled to compensation for further services, other than reimbursement of appropriately documented and approved expenses incurred by Contractor before the termination of this Agreement, to the extent that Contractor would have been entitled to such reimbursement but for the termination of this Agreement.

 

13. Representations and Warranties.

 

13.1

The Company represents and warrants to the Contractor as follows:

 

13.1.1

The Company is duly organized, validly existing and in good standing under the laws of Florida, has the power to transact the business in which it is now engaged and is duly qualified and in good standing under the laws of each jurisdiction where the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Company and its subsidiaries, taken as a whole. The Company does not do business under any fictitious business name.

13.1.2

The Company has the power and authority to execute, deliver and perform this Agreement and all obligations required and have taken all necessary actions to authorize this Agreement and the execution, delivery and performance of this Agreement and all obligations required. Except as shall have been obtained, no consent of any other person including, without limitation, stockholders and creditors of the Company, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Company in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required. This Agreement has been, and each instrument or document required will be, executed and delivered by a duly authorized officer of the Company, and this Agreement constitutes, and each instrument or document required when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

13.1.3

The execution, delivery and performance of this Agreement and the documents or instruments required will not violate any provision of any existing law or regulation binding on the Company, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Company, or the governing instruments of, or any securities issued by, the Company or of any mortgage, indenture, lease, contract or other Agreement, instrument or undertaking to which the Company is a party or by which the Company or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Company and its subsidiaries, taken as a whole, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertakings.

 

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13.2

The Contractor represents and warrants to the Company that:

 

13.2.1

The Contractor is duly organized and/or domiciled, validly existing and in good standing under the laws of Arizona, has the corporate or individual power to transact the business in which it is now engaged and is duly qualified to do business and is in good standing under the laws of each jurisdiction where the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Contractor, taken as a whole. The Contractor does not do business under any fictitious business name.

13.2.2

The Contractor has the corporate or individual power and authority to execute, deliver and perform this Agreement and all obligations required and has taken all necessary corporate action to authorize this Agreement and the execution, delivery and performance of this Agreement and all obligations required. Except as shall have been obtained, no consent of any other person including, without limitation, creditors of the Contractor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Contractor in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required. This Agreement has been and each instrument or document required will be executed and delivered by a duly authorized officer of the Contractor, and this Agreement constitutes, and each instrument or document required when executed and delivered will constitute, the legally valid and binding obligation of the Contractor enforceable against the Contractor in accordance with its terms.

13.2.3

The execution, delivery and performance of this Agreement and the documents or instruments required, will not violate any provision of any existing law or regulation binding on the Contractor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Contractor, or the governing instruments of, or any securities issued by, the Contractor or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Contractor is a party or by which the Contractor or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets, or financial condition of the Contractor and its subsidiaries, taken as a whole, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage indenture, lease, contract or other agreement, instrument or undertaking.

13.2.4

In rendering its duties under this Agreement, the Contractor shall not utilize any invention, discovery, development, improvement, innovation, or trade secret in which it does not, or the Company does not, have a proprietary interest.

 

14. Merger. This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity.

 

15. Successors and Assigns . This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, and permitted assigns.

 

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16. Choice of Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.

 

17. Arbitration. Any controversies arising out of the terms of this Agreement or its interpretation shall be settled in Orange County, Florida in accordance with the rules of the American Arbitration Association, and the judgment upon award may be entered in any court having jurisdiction thereof.

 

18. Headings. Section headings are not to be considered a part of this Agreement and are not intended to be a full and accurate description of the contents hereof.

 

19. Assignment. Neither the Company nor the Contractor shall assign any of its rights under this Agreement, or delegate the performance of any of its duties hereunder, without the prior written consent of both parties.

 

20. Notices. Any and all notices, demands, or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if personally served, or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice or demand is served personally, notice shall be deemed constructively made at the time of such personal service. If such notice, demand or other communication is given by mail, such notice shall be conclusively deemed given five days after deposit thereof in the United States mail addressed to the party to whom such notice, demand or other communication is to be given as follows:

 

If to the Company:

If to the Contractor:

Elite Data Services Inc.

Stephen Antol

4447 N. Central Expwy., Ste. 110-135

____________________________________________________

 

Dallas, TX 75205

____________________________________________________

Attn: Chief Executive Officer

Tel: (972) 885-3981

Tel: (___) ____________________________________________

Email: corp@edscompanies.com

____________________________________________________

 

Any party hereto may change its address for purposes of this paragraph by written notice given in the manner provided above.  

 

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21. Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by each party or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party will be deemed to constitute a waiver by the party taking such action, or compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

 

22. Entire Understanding. This Agreement represents the entire agreement of the parties hereto with respect to the matters contemplated hereby, and there are no written or oral representations, warranties, understandings or agreements with respect hereto, except as expressly set forth herein.

 

23. Unenforceability of Provisions. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired hereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

24. Counterparts. This Agreement may be executed via facsimile in one or more counterparts and transmitted via facsimile or PDF, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. When counterparts of copies have been executed by all parties, they shall have the same effect as if the signatures to each counterpart or copy were upon the same document and copies of such documents shall be deemed valid as originals.

 

[Signatures Follow On Next Page]

 

7

 

IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day and year first written above.

 

COMPANY

ELITE DATA SERVICES INC.

A Florida Corporation

By:

/s/ Charles Rimlinger

Charles Rimlinger,

Chief Executive Officer

CONTRACTOR

By:

/s/ Stephen Antol

Stephen Antol, Individually

 

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SCHEDULE I

 

DUTIES, TERM, AND COMPENSATION

 

1. DUTIES . The Company has engaged the Contractor perform services related to overseeing and managing the development and execution of the Company's long-term strategy with a view to creating shareholder value in the capacity of Chief Financial Officer ("CEO"), Treasurer and Secretary.

 

The CFO's leadership role also entails being ultimately responsible for all day-to-day administrative, financial, and risk management operations of the Company, to include the development of a financial and operational strategy, metrics tied to that strategy, and the ongoing development and monitoring of control systems designed to preserve company assets and report accurate financial results.

 

More specifically, the duties and responsibilities of the CFO include the following:

 

·

demonstrating ethical leadership and business integrity;

·

balancing short-term concerns and pressures, such as managing cash, liquidity, and profitability, and long-term vision and sustainable organizational success;

·

fulfilling stewardship responsibilities by ensuring effective compliance and control and responding to ever increasing regulatory developments, including financial reporting, capital requirements, and corporate responsibility;

·

sharing strategic leadership responsibilities with the CEO and other senior managers and ensuring the F&A function supports the business at a strategic and operational level;

·

driving and managing change and innovation within the organization; and

·

engaging and communicating effectively with colleagues, investors, customers, suppliers, regulators, and other internal and external stakeholders.

 

The Treasurer's leadership role also entails being ultimately responsible for corporate liquidity, investments, and risk management related to the company's financial activities.

 

More specifically, the duties and responsibilities of the Treasurer include the following:

 

·

Forecast cash flow positions, related borrowing needs, and available funds for investment;

·

Ensure that sufficient funds are available to meet ongoing operational and capital investment requirements;

·

Use hedging to mitigate financial risks related to the interest rates on the Company's borrowings, as well as on its foreign exchange positions;

·

Maintain banking relationships;

 

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·

Maintain credit rating agency relationships;

·

Arrange for equity and debt financing;

·

Invest funds;

·

Invest pension funds;

·

Monitor the activities of third parties handling outsourced treasury functions on behalf of the company;

·

Advise management on the liquidity aspects of its short- and long-range planning;

·

Oversee the extension of credit to customers;

·

Maintain a system of policies and procedures that impose an adequate level of control over treasury activities

 

The Secretary's leadership role also entails being ultimately responsible for ensuring the integrity of the governance framework, being responsible for the efficient administration of a Company, ensuring compliance with statutory and regulatory requirements and implementing decisions made by the Board of Directors.

 

More specifically, the duties and responsibilities of the Secretary include the following

 

·

Manage all board and committee meeting logistics, attend and record minutes of all board and committee meetings; facilitate board communications;

·

Advise the Board on its roles and responsibilities;

·

Facilitate the orientation of new Directors and assist in Director training and development;

·

Maintain key corporate documents and records;

·

Responsible for corporate disclosure and compliance with state corporation laws, stock exchange listing standards and SEC reporting and compliance;

·

Oversee Stockholder Relations including stock issuance and transfer operations; stockholder correspondence; prepare and distribute proxy statement;

·

Manage process pertaining to the annual shareholder meeting;

·

Subsidiary management and governance;

·

Monitor corporate governance developments and assist the Board in tailoring governance practices to meet the Board's needs and investor expectations;

·

Serve as a focal point for investor communication and engagement on corporate governance issues.

 

10

 

The Board of Directors reserve the right to amend the Duties and Responsibilities set forth in this Schedule I, from time to time, during the Initial Term of this Agreement, as deemed necessary.

 

2. TERM. The term of this Agreement shall begin as of the date hereof ("Effective Date") and shall end on the first anniversary date (the "Initial Term") following the Effective Date unless terminated earlier as provided in this Agreement. Following expiration of the Initial term, this Agreement shall continue for three (3) successive one (1) year term unless either party shall notify the other at least thirty (30) days prior to the end of the then term that such party is terminating this Agreement.

 

3. COMPENSATION .

 

3.1 Salary. Subject to the terms of this Agreement, as compensation for Contractor's services, the Company shall pay Contractor a monthly fee in cash equal to Five Thousand Dollars (USD $5,000.00) for the Initial Term and Ten Thousand Dollars (USD $10,000.00) for subsequent terms, unless otherwise agreed to in writing by the Board of Directors, to be paid on the 1st business day of each month, starting on the date of execution of this Agreement. In the event one or more payments to the Consultant is not made within thirty (30) business days of the due date, then Consultant may elect in writing to require the Company to make such payment in the form of shares of restricted common stock of the Company, pursuant to the terms and conditions of the Company's Stock Option Plan then in effect. Any and all payments due and payable to Consultant in the form of cash and/or stock compensation as set forth hereinabove shall be paid to Consultant and/or assigns.

 

3.2 Stock Option Plan . The Company may, from time to time, enter into supplemental agreements or memorandums in writing with Contractor for the award and payment to Contractor of additional compensation, including increases in the aforesaid salary, bonuses, or stock incentives upon such terms and conditions as the Company shall deem to be in its best interest and in the event of the execution by the Company of any such agreements or memoranda, the right of Contractor to additional compensation or bonuses shall be determined in accordance with applicable provisions thereof, subject, however, to the provisions hereinafter set forth. The amount of any bonus or stock incentive may be increased or decreased and the amount of any additional compensation to be received by Contractor from the Company is within the sole and absolute discretion of the Company's Board of Directors, pursuant the Company's Equity Incentive Stock Plan (the "Stock Plan"), as approved as of August 27, 2015, which gives the Company the right to grant certain stock awards or options to employees, directors and/or consultants of the Company or any of its subsidiaries.

 

3.3 Equity Grant . Due to the potential risks involved related to the duties of the Contractor to be performed on behalf of the Company, and as an inducement to enter into this Agreement, the Contractor and/or assigns shall be issued a total of One Million (1,000,000) shares of Series B Preferred Stock of the Company (the "Series B Preferred") at a per share price of $0.0001, pursuant to the execution of a Subscription Agreement ("Subscription Agreement"), on the terms and conditions substantially in the form annexed hereto as Exhibit A.

 

3.4 Expenses . In addition to the compensation described in Paragraph 3.1. above, Contractor shall be entitled to reimbursement by the Company for all actual, reasonable and direct expenses incurred by him in the performance of his duties hereunder, provided such expenses (i) are business expenses that are properly tax deductible for the Company (ii) were pre-approved by an appropriate officer of the Company and (iii) were otherwise incurred in accordance with the policies and procedures established by the Company from time to time. Contractor shall provide the Company with written documentation of any expenses submitted for reimbursement as required by Company policy and reimbursement for each item of approved expense shall be made within a reasonable time.

 

4. INDEMNIFICATION. As an inducement to Contractor to executed this Agreement, Company agrees to the execution of an Indemnification Agreement ("Indemnification Agreement"), on the terms and conditions substantially in the form annexed hereto as Exhibit B.

 

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EXHIBIT A

 

SUBSCRIPTION AGREEMENT

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES DESCRIBED HEREIN.

 

ANY NON-PUBLIC MATERIAL INFORMATION OBTAINED FROM THE COMPANY, IN CONNECTION WITH THE COMPANY, THE SECURITIES, THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT, IS CONFIDENTIAL. BY ACCEPTING SUCH INFORMATION CONTAINED, THE RECIPIENT ACKNOWLEDGES ITS EXPRESS AGREEMENT WITH ELITE DATA SERVICES INC. TO MAINTAIN IN CONFIDENCE SUCH INFORMATION PURSUANT TO SECTION 8 OF THIS SUBSCRIPTION AGREEMENT. ELITE DATA SERVICES INC. HAS CAUSED THESE MATERIALS TO BE DELIVERED TO YOU IN RELIANCE UPON YOUR AGREEMENT TO MAINTAIN THE CONFIDENTIALITY OF THIS INFORMATION AND PURSUANT TO REGULATION FD PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION.

 

THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.

 

ELITE DATA SERVICES INC.  

4447 N. Central Expressway  

Suite 110-135  

Dallas, TX 75205

 

Ladies and Gentlemen:

 

The undersigned understands that ELITE DATA SERVICES INC ., a corporation organized under the laws of Florida (the " Company "), is offering an aggregate of 1,000,000 shares of its Series B Preferred Stock (the " Preferred Stock "), par value $0.0001 per share (the " Securities "), at a purchase price of $0.0001 per share (the " Purchase Price ") in a private placement. The undersigned further understands that the offering is being made without registration of the Securities under the Securities Act of 1933, as amended (the " Securities Act "), or any securities law of any state of the United States or of any other jurisdiction, and is being made in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the " Securities Act "), Rule 506 of Regulation D promulgated by the U.S. Securities and Exchange Commission (the " SEC ") under the Securities Act (" Regulation D ").

 

1. Subscription . Subject to the terms and conditions hereof, the undersigned hereby irrevocably subscribes for the Securities set forth in Appendix A hereto for the aggregate purchase price set forth in Appendix A, which is payable as described in Section 4 hereof. The undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this subscription agreement (the " Subscription Agreement ").

 

12

 

2. Acceptance of Subscription and Issuance of Securities . It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned at the Closing referred to in Section 3 hereof. Subscriptions need not be accepted in the order received, and the Securities may be allocated among subscribers. Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Securities to any person who is a resident of a jurisdiction in which the issuance of Securities to such person would constitute a violation of the securities, "blue sky" or other similar laws of such jurisdiction (collectively referred to as the " State Securities Laws ").

 

3. The Closing . The closing of the purchase and sale of the Securities (the " Closing ") shall take place at such time and place as the Company may designate by notice to the undersigned.

 

4. Payment for Securities . Payment for the Securities shall be received by the Company from the undersigned by cashier's check or other means approved by the Company at or prior to the Closing, in the amount as set forth in Appendix A hereto. The Company shall deliver certificates representing the Securities to the undersigned at the Closing bearing an appropriate legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.

 

5. Representations and Warranties of the Company . As of the Closing, the Company represents and warrants that:

 

(a) The Company is duly formed and validly existing under the laws of Florida, with full power and authority to conduct its business as it is currently being conducted and to own its assets; and has secured any other authorizations, approvals, permits and orders required by law for the conduct by the Company of its business as it is currently being conducted, and is duly qualified to do business and in good standing in each jurisdiction in which the failure to be so qualified would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. " Material Adverse Effect " means, with respect to any person (including all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures and other entities), a material adverse effect on the business, financial condition, operations, results of operations, assets, customer, supplier or employee relations or future prospects of such person.

 

(b) The Company has all requisite authority and power, authorizations, consents and approvals to enter into and deliver this Subscription Agreement and any other certificate, agreement, document or instrument to be executed and delivered by the Company in connection with the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Subscription Agreement by the Company and the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company. This Subscription Agreement has been duly and validly authorized and approved, executed and delivered by the Company.

 

(c) The Securities have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Subscription Agreement, will be validly issued, fully paid and nonassessable.

 

13

 

6. Representations and Warranties of the Undersigned . The undersigned hereby represents and warrants to and covenants with the Company that:

 

(a) General .

 

(i) The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this Subscription Agreement and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will not contravene any law, rule or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.

 

(ii) The undersigned is a resident of or a corporation or other entity with its principal business address of the place set forth on the signature page hereto and is not acquiring the Securities as a nominee or agent or otherwise for any other person.

 

(iii) The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall have no responsibility therefore.

 

(iv) Neither the execution or delivery by the undersigned of this Subscription Agreement to which the undersigned is a party, nor the consummation or performance by the undersigned of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of the undersigned (if the undersigned is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which the undersigned is a party or by which the properties or assets of the undersigned are bound; or (c) contravene, conflict with, result in any breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, impair the rights of the undersigned under, or alter the obligations of any person under, or create in any person the right to terminate, amend, accelerate or cancel, or require any notice, report or other filing (whether with a governmental authority or any other person) pursuant to, or result in the creation of a lien on any of the assets or properties of the undersigned under, any note, bond, mortgage, indenture, contract, lease, license, permit, franchise or other instrument or obligation to which the undersigned is a party or any of the undersigned's assets and properties are bound or affected.

 

(v) There is no action pending against, or to the knowledge of the undersigned, threatened against or affecting, the undersigned by any governmental authority or other person with respect to the undersigned that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Subscription Agreement.

 

(b) No Brokers or Finders . No person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the undersigned for any commission, fee or other compensation as a finder or broker, or in any similar capacity, based upon arrangements made by or on behalf of the undersigned and the undersigned will indemnify and hold the Company and its affiliates harmless against any liability or expense arising out of, or in connection with, any such claim.

 

14

 

(c) Investment Representations . The undersigned severally, and not jointly, hereby represents and warrants, solely with respect to itself and not any other investor, to the Company as follows:

 

(i) Purchase Entirely for Own Account . The undersigned is acquiring such the Securities proposed to be acquired hereunder for investment for its own account and not with a view to the resale or distribution of any part thereof, and the undersigned has no present intention of selling or otherwise distributing such Securities, except in compliance with applicable securities laws.

 

(ii) Restricted Securities . The undersigned understands that the Securities are characterized as "restricted securities" under the Securities Act inasmuch as this Subscription Agreement contemplates that, if acquired by the shareholder pursuant hereto, the Securities would be acquired in a transaction not involving a public offering. The issuance of the Securities hereunder is being effected in reliance upon an exemption from registration afforded Regulation D and/or Regulation S. The undersigned further acknowledges that if the Securities are issued to the undersigned in accordance with the provisions of this Subscription Agreement, such Securities may not be resold without registration under the Securities Act or the existence of an exemption therefrom. The undersigned represents that he is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act

 

(iii) Acknowledgment of Non-Registration . The undersigned understands and agrees that the Securities to be issued pursuant to this Subscription Agreement have not been registered under the Securities Act or the securities laws of any state of the United States of America (the " U.S. ").

 

(iv) Status . By its execution of this Subscription Agreement, the undersigned represents and warrants to the Company as indicated on its signature page to this Subscription Agreement, that the undersigned is, and will be at the Closing, an Accredited Investor (as defined below). The undersigned understands that the Securities are being offered and sold to the undersigned in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the undersigned set forth in this Subscription Agreement, in order that the Company may determine the applicability and availability of the exemptions from registration of the Securities on which the Company is relying.

 

(v) Additional Representations and Warranties . The undersigned, severally and not jointly, further represents and warrants to the Company as follows: (i) such person qualifies as an Accredited Investor (as defined below); (ii) such person consents to the placement of a legend on any certificate or other document evidencing the Securities substantially in the form set forth in Section 6(d) ; (iii) such person has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person's or entity's interests in connection with the transactions contemplated by this Subscription Agreement; (iv) such person has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Securities and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Securities; (v) such person has had access to the SEC Reports; (vi) such person has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Company that such person has requested and all such public information is sufficient for such person to evaluate the risks of investing in the Securities; (vii) such person has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Securities; (viii) such person is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in this Subscription Agreement or the SEC Reports; (ix) such person will not sell or otherwise transfer the Securities, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available; (x) such person understands and acknowledges that the Company is under no obligation to register the Securities for sale under the Securities Act; (xi) such person understands and acknowledges that the Securities have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such person and that any representation to the contrary is a criminal offense; and (xii) such person acknowledges that the representations, warranties and agreements made by such person herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Securities. " Accredited Investor " has the meaning set forth in Rule 501 under the Securities Act.

 

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(vi) Opinion . The undersigned will not transfer any or all of the undersigned's Securities pursuant to Regulation D or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of the undersigned's Securities, without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be made in compliance with Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws

 

(vii) Consent . The undersigned understands and acknowledges that the Company may refuse to transfer the Securities, unless the undersigned complies with Section 6(d) and any other restrictions on transferability set forth herein. The undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company's preferred stock in order to implement the restrictions on transfer of the Securities.

 

(d) Stock Legends . The undersigned hereby agrees with the Company as follows:

 

(i) The certificates evidencing the Securities issued to the undersigned who is Accredited Investors, and each certificate issued in transfer thereof, will bear the following or similar legend:

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION WITH ANY FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS HEREIN, IN THE SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, AND UPON FORECLOSURE OR TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS CONTAINED HEREIN, IN THE SUBSCRIPTION AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.]

 

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(i) Other Legends . The certificates representing such Securities, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable law, including, without limitation, any state corporate and state securities law, or contract.

 

(ii) Residency; Foreign Securities Laws . The undersigned acknowledges that the Company makes no representation or warranty that any Securities issued outside of the U.S. have been offered or sold in compliance with the laws of the jurisdiction into which such Securities were issued. The undersigned warrants to the Company that no filing is required by the Company with any governmental authority in the undersigned's jurisdiction in connection with the transactions contemplated hereby. The undersigned has satisfied itself as to the full observance of the laws of its jurisdiction in connection with the acquisition of the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The undersigned's acquisition of and payment for, and its continued ownership of the Securities, will not violate any applicable securities or other laws of his, her or its jurisdiction.

 

(e) Disclosure . No representation or warranty of the undersigned contained in this Subscription Agreement and no statement or disclosure made by or on behalf of the undersigned to the Company or any of its Subsidiaries pursuant to this Subscription Agreement herein contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

 

(f) Non-reliance .

 

(i) The undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations related to the terms and conditions of the Securities and the other transaction documents shall not be considered investment advice or a recommendation to purchase the Securities.

 

(ii) The undersigned confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) an of investment in the Securities or (B) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations. In deciding to purchase the Securities, the undersigned is not relying on the advice or recommendations of the Company and the undersigned has made its own independent decision that the investment in the Securities is suitable and appropriate for the undersigned.

 

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7. Conditions to Obligation of the Undersigned and the Company .

 

(a) Conditions to Obligation of the Undersigned . The obligations of the undersigned to enter into and perform their respective obligations under this Subscription Agreement are subject, at the option of the undersigned, to the fulfillment on or prior to the Closing of the following conditions, any one or more of which may be waived by the undersigned in writing:

 

(i) The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the Closing (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date);

 

(ii) No event, change or development shall exist or shall have occurred since the date of this Agreement that has had or is reasonably likely to have a Material Adverse Effect on the Company; and

 

(iii) The Company shall have duly executed and delivered to the undersigned this Subscription Agreement.

 

(c) Conditions to Obligation of the Company. The obligations of the Company to enter into and perform its obligations under this Subscription Agreement are subject, at the option of the Company, to the fulfillment on or prior to the Closing of the following conditions, any one or more of which may be waived by the Company:

 

(i) The representations and warranties of the undersigned set forth in this Subscription Agreement shall be true and correct in all material respects as of the Closing (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date); and

 

(ii) The undersigned shall have executed this Subscription Agreement to which it is a party and completed its investor questionnaire substantially in form attached hereto as Exhibit A and delivered the same to the Company.

 

8. Confidentiality . The undersigned shall maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other, non-public material information obtained from the Company in connection with the Company, the Securities, this Subscription Agreement or the transactions contemplated by this Subscription Agreement, unless (a) such information becomes publicly available through no fault of such Party, or (b) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

 

9. Waiver, Amendment . Neither this Subscription Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.

 

10. Assignability . Neither this Subscription Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party.

 

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11. Waiver of Jury Trial . THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.

 

12. Submission to Jurisdiction . With respect to any suit, action or proceeding relating to any offers, purchases or sales of the Securities by the undersigned, the undersigned irrevocably submits to the jurisdiction of the federal or state courts located in the State of New York which submission shall be exclusive unless none of such courts has lawful jurisdiction over such proceedings.

 

13. Governing Law . This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

 

14. Section and Other Headings . The section and other headings contained in this Subscription Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Subscription Agreement.

 

15. Counterparts . This Subscription Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

16. Notices . All notices (including change of addresses) and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party shall have specified by notice in writing to the other):

 

If to the Company:

ELITE DATA SERVICES INC.

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205

Attn: Chief Executive Officer

Telephone No.: (972) 885-3981

Email: corp@edscompanies.com 

 

17. Binding Effect . The provisions of this Subscription Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

 

18. Survival . All representations, warranties and covenants contained in this Subscription Agreement shall survive (i) the acceptance of the subscription by the Company and (ii) the death or disability of the undersigned.

 

19. Notification of Changes . The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Securities pursuant to this Subscription Agreement which would cause any representation, warranty, or covenant of the undersigned contained in this Subscription Agreement to be false or incorrect.

 

20. Severability . If any term or provision of this Subscription Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Subscription Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

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IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 18th day of May, 2016.

 

PURCHASER (if an individual):

PURCHASER (if an entity):

By:

/s/ Stephen Antol

Stephen Antol

Legal Name of Entity

Individually

By:

Name:

Title:

Address:

 

Place of Domicile or Formation: Arizona, U.S.

 

Aggregate Subscription Amount: US$ 100.00

 

The offer to purchase Securities as set forth above is confirmed and accepted by the Company as to 1,000,000 shares of its Series B Preferred Stock.

 

ELITE DATA SERVICES INC.

By:

/s/ Charles Rimlinger

Charles Rimlinger

 

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APPENDIX A

 

CONSIDERATION TO BE DELIVERED

 

Securities to Be Acquired

Purchase Price

Aggregate Purchase Price to be Paid

1,000,0000 shares of the Company's Series B Preferred Stock

US$ 0.0001 per share

US$ 100.00

 

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EXHIBIT A

 

INVESTOR QUESTIONNAIRE

 

See Attached.

 

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EXHIBIT B

 

Indemnification Agreement

 

ELITE DATA SERVICES INC.

 

This Indemnification Agreement (this " Agreement ") is made as of May 18, 2016, by and between ELITE DATA SERVICES INC., a Florida corporation (the " Company "), and STEPHEN ANTOL (" Indemnitee ").

 

RECITALS

 

The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee may not be willing to continue to serve in Indemnitee's current capacity with the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.

 

AGREEMENT

 

In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:

 

1. Indemnification .

 

(a) Third-Party Proceedings . To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in the Company's favor), against all Expenses, judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful.

 

(b) Proceedings By or in the Right of the Company . To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in the Company's favor, against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

 

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(c) Success on the Merits . To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters to the fullest extent permitted by applicable law. If any Proceeding is disposed of on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respect to any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee's conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.

 

(d) Witness Expenses . To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding.

 

2. Indemnification Procedure .

 

(a) Advancement of Expenses . To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statement requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall be unsecured and interest free and shall be made without regard to Indemnitee's ability to repay the Expenses and without regard to Indemnitee's ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled to continue to receive advancement of Expenses pursuant to this Section 2(a) unless and until the matter of Indemnitee's entitlement to indemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify for advances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repayment of advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than the execution of this Agreement.

 

(b) Notice and Cooperation by Indemnitee . Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for which indemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of, and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 13(e) below. In addition, Indemnitee shall give the Company such additional information and cooperation as the Company may reasonably request. Indemnitee's failure to so notify, provide information and otherwise cooperate with the Company shall not relieve the Company of any obligation that it may have to Indemnitee under this Agreement, except to the extent that the Company is adversely affected by such failure.

 

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(c) Determination of Entitlement .

 

(i) Final Disposition . Notwithstanding any other provision in this Agreement, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

(ii) Determination and Payment . Subject to the foregoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, to the extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth in Florida General Corporation Law. The Company shall pay any claims made under this Agreement, under any statute, or under any provision of the Company's Certificate of Incorporation or Bylaws providing for indemnification or advancement of Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claim is not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against the Company in the Florida Courts to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shall also be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(a)) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption with clear and convincing evidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful. In addition, it is the parties' intention that if the Company contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement to indemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisite determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

 

25

 

(iii) Change of Control . Notwithstanding any other provision in this Agreement, if a Change of Control has occurred, any person or body appointed by the Board of Directors in accordance with applicable law to review the Company's obligations hereunder and under applicable law shall be Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, will render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Counsel in connection with all matters concerning a single Indemnitee, and such Independent Counsel shall be the Independent Counsel for any or all other Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Counsel representing other indemnitees under agreements similar to this Agreement.

 

(d) Payment Directions . To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee's request (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses.

 

(e) Notice to Insurers . If, at the time of the receipt of a notice of a claim pursuant to Section 2(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

(f) Defense of Claim and Selection of Counsel . In the event the Company shall be obligated under Section 2(a) hereof to advance Expenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. In addition, if there exists a potential, but not an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred by Indemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee's defense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to be Expenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether such conflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Company shall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend if the Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required to obtain Indemnitee's prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (1) does not grant Indemnitee a complete release of liability, (2) would impose any penalty or limitation on Indemnitee, or (3) would admit any liability or misconduct by Indemnitee.

 

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3. Additional Indemnification Rights .

 

(a) Scope . Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Florida corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee's rights and the Company's obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Florida corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties' rights and obligations hereunder.

 

(b) Nonexclusivity . The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company's Board of Directors, the Florida General Corporation Law, or otherwise, both as to action in Indemnitee's official capacity and as to action in another capacity while holding such office.

 

(c) Interest on Unpaid Amounts . If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90) days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company to Indemnitee at the legal rate under Florida law for amounts which the Company indemnifies or is obligated to indemnify for the period commencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement and ending with the date on which such payment is made to Indemnitee by the Company.

 

(d) Information Sharing . If Indemnitee is the subject of or is implicated in any way during an investigation, whether formal or informal, the Company shall share with Indemnitee any information the Company has furnished to any third parties concerning the investigation provided that, at the time such information is so furnished to such third party, Indemnitee continues to serve in one or more capacities giving rise to the Company's indemnification obligations under Section 1.

 

(e) Third-Party Indemnification . The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the " Third-PartyIndemnitors "). The Company hereby agrees that it is the indemnitor of first resort ( i.e., its obligations to Indemnitee are primary and any obligation of the Third-Party Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), and that the Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Third- Party Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Third-Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company if the Third-Party Indemnitors had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Third-Party Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Third-Party Indemnitors shall have a right of contribution by the Company to the Third-Party Indemnitors with respect to any advance or payment by the Third-Party Indemnitors to or on behalf of the Indemnitee.

 

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(f) Indemnification of Control Person . If (i) Indemnitee is or was affiliated with one or more of the Company's current or former stockholders that may be deemed to be or to have been a controlling person of the Company (each a " Control Person "), (ii) a Control Person is, or is threatened to be made, a party to or a participant (including as a witness) in any proceeding, and (iii) the Control Person's involvement in the proceeding is related to Indemnitee's service to the Company as a director of the Company, or arises from the Control Person's status or alleged status as a controlling person of the Company resulting from such Control Person's affiliation with Indemnitee, then the Control Person shall be entitled to all of the indemnification rights and remedies under this Agreement to the same extent as Indemnitee.

 

4. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines and amounts paid in settlement to which Indemnitee is entitled.

 

5. Director and Officer Liability Insurance .

 

(a) D&O Policy . The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors and officers of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.

 

(b) Tail Coverage . In the event of a Change of Control or the Company's becoming insolvent (including being placed into receivership or entering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies then maintained by the Company in providing insurance (directors' and officers' liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter.

 

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6. Severability . Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

 

7. Exclusions . Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

 

(a) Claims Initiated by Indemnitee . To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Florida General Corporation Law, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of this subsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary or advisable in support of Indemnitee's defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party;

 

(b) Lack of Good Faith . To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Florida General Corporation Law, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;

 

(c) Insured Claims . To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by an insurance carrier under an insurance policy maintained by the Company; or

 

(d) Certain Exchange Act Claims . To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the " Sarbanes-Oxley Act ") or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicable law and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually and reasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject to indemnification hereunder.

 

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8. Contribution Claims .

 

(a) If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason other than those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b) With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may be brought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable with Indemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceeding had been brought against Indemnitee.

 

9. No Imputation . The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement.

 

10. Determination of Good Faith . For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board of Directors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensation consultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.

 

11. Defined Terms and Phrases . For purposes of this Agreement, the following terms shall have the following meanings:

 

(a) " Beneficial Owner " and " Beneficial Ownership " shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act as in effect on the date hereof.

 

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(b) " Change of Control " shall be deemed to occur upon the earliest of any of the following events:

 

(i) Acquisition of Stock by Third Party . Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing [20-50]% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company's securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors and such acquisition would not constitute a Change of Control under part (iii) of this definition.

 

(ii) Change in Board of Directors . Individuals who, as of the date of this Agreement, constitute the Company's Board of Directors (the " Board "), and any new director whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date of this Agreement (collectively, the " Continuing Directors "), cease for any reason to constitute at least a majority of the members of the Board.

 

(iii) Corporate Transaction . The effective date of a reorganization, merger, or consolidation of the Company (a " Business Combination "), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors and with the power to elect at least a majority of the Board or other governing body of the surviving entity; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination.

 

(iv) Liquidation . The approval by the Company's stockholders of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company's assets, other than factoring the Company's current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale or disposition in one transaction or a series of related transactions).

 

(v) Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under the Exchange Act whether or not the Company is then subject to such reporting requirement.

 

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(c) " Company " shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

 

(d) " Enterprise " means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent.

 

(e) " Exchange Act " means the Securities Exchange Act of 1934, as amended.

 

(f) " Expenses " shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys' fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement (including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to the imposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expenses incurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costs relating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessment or other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(g) " Independent Counsel " means an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(c)(iii), who will not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

 

(h) " Person " shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that "Person" shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) any employee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporation owned, directly or indirectly, by the Company's stockholders in substantially the same proportions as their ownership of stock of the Company (an " Employee Benefit Plan "); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.

 

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(i) " Proceeding " shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by a third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee's part while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement.

 

(j) In addition, references to " other enterprise " shall include another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise; references to " fines " shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; references to " serving at the request of the Company " shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner " not opposed to the best interests of the Company " as referred to in this Agreement; references to " include " or " including " shall mean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this Agreement unless otherwise specified.

 

12. Attorneys' Fees . In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such Proceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous.

 

13. Miscellaneous .

 

(a) Governing Law . The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Florida, without giving effect to principles of conflicts of law.

 

(b) Entire Agreement; Binding Effect . Without limiting any of the rights of Indemnitee described in Section 3(b), this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions and supersedes any and all previous agreements between them covering the subject matter herein. The indemnification provided under this Agreement applies with respect to events occurring before or after the effective date of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company in any and all indemnified capacities.

 

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(c) Amendments and Waivers . No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

 

(d) Successors and Assigns . This Agreement shall be binding upon the Company and its successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, and inure to the benefit of Indemnitee and Indemnitee's heirs, executors, administrators, legal representatives and assigns. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e) Notices . Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company's books and records.

 

(f) Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

(g) Construction . This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

(h) Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile copy will have the same force and effect as execution of an original, and a facsimile signature will be deemed an original and valid signature.

 

(i) No Employment Rights . Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

 

(j) Company Position . The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcing or interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

 

(k) Subrogation . [Subject to Section 3(e), in] the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.

 

[Signature Page Follows]

 

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The parties have executed this Agreement as of the date first set forth above.

 

THE COMPANY:

ELITE DATA SERVICES INC.

By:

/s/ Charles Rimlinger

Charles Rimlinger

Chief Executive Officer

ADDRESS:

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205

Email: corp@edscompanies.com

AGREED TO AND ACCEPTED:

INDEMNITEE:

By:

/s/ Stephen Antol

Stephen Antol

Individually

ADDRESS:

Phone:

Email:

 

 

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EXHIBIT 10.74

 

May 18, 2016

 

JMS Law Group, PLLC  

988C Old Country Road, #233  

Plainview, NY 11803  

Attn: Mr. Jeffrey M. Stein, Esq.  

 

Re: Letter of Waiver Request

 

Dear: Mr. Stein, Esq.,

 

This letter shall confirm the mutual understandings of a settlement agreement for a payment in full and discharge of all claims pertaining to the outstanding invoices owed by Elite Data Services Inc. (the "Company") to JMS Law Group PLLC ("You") in the total amount of Twenty Thousand Dollars (USD $20,000.00) (the "Indebtedness"), for services rendered to the Company through April 30, 2016, upon the terms and conditions as set forth below.

 

Pursuant to our discussions, You have agreed to accept a total of Twenty-Seven Thousand Five Hundred Dollars (USD $27,500,00) from the Company as payment in full of the Indebtedness, and a payment in advance for additional services to be rendered to the Company by You until July 31, 2016 (the "Settlement").

 

As payment for the Settlement, You have also agreed to accept payment in the form of a Convertible Redeemable Promissory Note (the "Note"), attached hereto as Exhibit A, under the terms and conditions set forth therein.

 

Upon receipt by You of the issued Note by the Company for the Settlement, You hereby fully release and discharge the Company of and from any and all past, present or future claims, demands or obligations related to the Indebtedness, except for the rights and remedies afforded to You under the terms and conditions of the Note.

 

If the foregoing fully sets forth our mutual understandings described hereinabove, please countersign this letter and return a signed copy to us.

 

 

Yours truly,

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger, CEO

 

 

Acknowledged and Accepted by:

 

 

 

 

JMS Law Group, PLLC

 
By:

/s/ Jeffrey M. Stein, Esq.

Jeffrey M. Stein, Esq.

Principal

 
May 18, 2016
   

 
1
 

 

EXHIBIT A

 

Convertible Redeemable Promissory Note

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