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
   

 
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EXHIBIT A

 

Convertible Redeemable Promissory Note

(JMS Law Group PLLC )

 

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 $27,500.00

 

ELITE DATA SERVICES, INC.

CONVERTIBLE REDEEMABLE NOTE

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of JMS LAW GROUP PLLC and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of TWENTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS (U.S. $27,500.00), at ten percent (10%) interest per annum commencing on January 1, 2016 (the " Effective Date "), due and payable to Holder by Company on the sixth month anniversary date following the date of execution of this Note (each a " Maturity Date "), as payment in full of any and all outstanding invoices owed by Company to Holder for services rendered by Holder as of May 18, 2016, which shall include services to be rendered by Holder to the Company until July 31, 2016. The Company will pay interest payment and the outstanding principal due upon this Note on 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 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.

 

 
4
 

 

(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

 

 
5
 

 

(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%).

 

 
6
 

 

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

 

 

 
8
 

 

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:  ____________________________________________________________________

 

 

9


EXHIBIT 10.75  

 

THIRD AMENDMENT TO SECURITIES PURCHASE AGREEMENT

 

This THIRD AMENDMENT TO THE SECURITIES PURCHASE AGREEMENT (the "Third Amendment") dated as of May 20, 2016 (the "Effective Date"), is made and entered into by and between H Y H INVESTMENTS, S.A. (the "Seller") and ELITE DATA SERVICES INC. (the "Purchaser" which shall include its assigns).

 

RECITALS

 

WHEREAS, the Purchaser and the Seller entered into a Securities Purchase Agreement (the "Original Purchase Agreement") dated April 4, 2015, which was modified on June 30, 2015 ("First Amendment") to reflect a restated effective date of the Agreement to April 6, 2016, and then further modified on November 20, 2015 ("Second Amendment"), to reflect the assignment of joint liability of the Purchase Agrement to Elite Holdings, S.A., a wholly owned subsidiary incorporated on behalf of Purchaser so as to comply with the regulatory authority of the Republic of Honduras.

 

WHEREAS, the Purchaser and Seller entered into a related Promissory Note dated April 6, 2015 (the "Original Note") which was replaced by the Restated Convertible Promissory Note (the "Restated Note") which modified the effective date of the Restated Note to April 6, 2016.

 

WHEREAS, the Original Purchase Agreement, the First Amendment, the Second Amendment, the Original Note, and the Restated Note are collectively hereinafter referred to as (the "Original Agreements"); and

 

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

 

 
1
 

 

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.  Purchase Agreement Exchange . The Purchaser and Seller mutually agree to amend and restate certain terms of the Original Purchase Agreement, First Amendment, Second Amendment, and Original Note, in which the parties agree to cancel the Original Purchase Agreement in exchange for a new joint venture agreement (the "Joint Venture Agreement"), in the form attached hereto as Exhibit A, on the terms and condition set forth therein.

 

3.  Amended and Restated Note . The Purchaser and Seller mutually agree to further amend and restate the Restated Note (the "Amended and Restated Note"), in the form attached hereto as Exhibit B, 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.

 

[Signature Page to Follow on Next Page]

 

 
2
 

 

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

 

PURCHASER

ELITE DATA SERVICES, INC.

 

ELITE DATA HOLDINGS S.A.

 

A Florida corporation

A Honduras corporation

By: /s/ Charles Rimlinger

 

By:

/s/ Sarah Myers

 

Charles Rimlinger

 

 

Sarah Myers

 

Chief Executve Officer

 

 

President

 

 

ELITE GAMING VENTURES LLC

on behalf of itself and Elite Holdings, S.A.

 

By: /s/ Charles Rimlinger

 

Charles Rimlinger

 

Chief Executve Officer

 

 

SELLER

 

H Y H INVESTMENTS, S.A.

 
By: /s/ Wilson Stevenson  
Wilson Stevenson

Owner

   

 
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EXHIBIT A

 

JOINT VENTURE AGREEMENT

 

THIS AGREEMENT (the "Agreement") is made and entered into as of this 20th day of May 2016 by and among ELITE GAMING VENTURES LLC, a Delaware limited liability company ("EGV"), and ELITE HOLDINGS S.A., a Honduras corporation (hereinafter referred to as the "Company"), each a subsidiary of ELITE DATA SERVICES INC., a Florida corporation ("DEAC"), H Y H INVESTMENTS S.A., a Honduras corporation ("HYHI") and EL MAR MUERTO BEAUTY MINERAL, S.A., a Honduras corporation ("EMBM"), (each a "Party" and collectively referred to as the "Parties").

 

RECITALS

 

WHEREAS, DEAC is a publicly-traded company listed on the Over-the-Counter Bulletin Board stock exchange;

 

WHEREAS, HYHI holds one hundred percent (100%) of the ownership interest of EMBM, a gaming company that holds a license to operate gaming machines in several cities in Honduras and Roatan;

 

WHEREAS, on April 6, 2015, DEAC entered into a Securities Purchase Agreement (the "Original Purchase Agreement") and Promissory Note (the "Original Note") with HYHI to acquire all of the capital stock of EMBM, whose sole assets consist of a license to operate gaming machines in the following distributions: eighty (80) slot machines in the county of La Lima, Cortes; eighty (80) slot machines in the county of Trujillo, Colon; and One Hundred and Sixty (160) slot machines in Roatan for a total sum of Ten Million Dollars ($10,000,000) payable as follows: (A) One Hundred Thousand Dollars ($100,000) as a non-refundable payment payable in cash within 10 business days (the "Original Initial Payment"); (B) Nine Hundred Thousand Dollars ($900,000) payable on or before April 6, 2016 in the form of cash or shares of common stock of DEAC at HYHI's option, at the average closing price of the common stock of DEAC for the five (5) trading days immediately preceding April 6, 2016; (C) Nine Million Dollars ($9,000,0000) payable up to Two Million Five Hundred Thousand Dollars ($2,500,000) per year thereafter through March 31, 2021 by either cash payments or out of the revenues received EMBM during this time, at an amount equal to Twenty Five (25%) percent of the net revenues of EMBM during such time period. In the event that HYHI does not receive the full amount due on or before March 31, 2021, such amount due may be payable, at HYHI's option, via the issuance of shares of common stock of DEAC, at the average closing price of the common stock of DEAC for the five (5) trading days immediately preceding March 31, 2021. At HYHI's option beginning on or after April 17, 2017, payments tendered in DEAC's common stock may be repurchased by DEAC. As conditions to purchase, HYHI will be permitted to receive a license granting it the usage of twenty-five (25) machines in the municipality of Roatan and be permitted to have online gaming distribution rights once and if the appropriate approvals have been granted. So long as DEAC fulfilled the conditions to purchase, HYHI shall waive applicable interest payments of 3.85% per annum due and payable in monthly installments;

 

WHEREAS, on June 30, 2015, DEAC and HYHI executed the first amendment (the "First Amendment") to the Original Purchase Agreement and Original Note to reflect a due date of April 6, 2016 in conjunction with the first payment of Nine Hundred Thousand Dollars ($900,000), which is due in either cash, stock, or 25% of the net revenues of EMBM's operations. The Original Note was also amended to reflect the current purchase price owed was reduced to $9,900,000, which deducts the $100,000 of the Original Initial Payment, tendered on April 6, 2015;

 

WHEREAS, on November 20, 2015, DEAC and HYHI executed the second amendment to the Original Purchase Agreement (the "Second Amendment") and Original Note to reflect the assignment of the Original Purchase Agreement and Original Note to Company, a wholly-owned subsidiary owned by DEAC on a jointly and severally liable basis with DEAC so as to comply with the regulatory authority of the Republic of Honduras. The Second Amendment also removed any Required Approvals on part of HYHI to enter into in the Original Purchase Agreement and Original Note. The Second Amendment specified that as long as DEAC is current in its payment obligations, upon good faith payment, Purchaser shall have the right to operate gaming machines permitted under the license and proceed with the use of the license as owner of EMBM with full power and authority to contract, license, sub-license, loan, lease, enter into contract or any other business venture in which entitles DEAC and the Company to the benefit of the license on behalf of EMBM. The Second Amendment also clarified that the shares of EMBM would be assigned to Company after the full purchase price had been tendered to HYHI;

 

 
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WHEREAS, on even date herewith, DEAC and HYHI executed the third amendment to the Purchase Agreement (the "Third Amendment"), of which this Agreement is made a part, in which the parties mutually agreed to amend and restate certain terms of the Original Purchase Agreement, First Amendment, Second Amendment, and Original Note, in which the parties agree to cancel the Original Purchase Agreement in exchange for the establishment of a joint venture ( the "Joint Venture"), organized to distribute and manage 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 (the "Territory"), and such other distribution locations as they may agree upon from time to time, under the terms and conditions set forth hereinbelow;

 

NOW, THEREFORE, based on the foregoing premises, the parties hereto agree as follows:

 

AGREEMENT

 

ARTICLE 1. ESTABLISHMENT OF THE COMPANY AND PURPOSE OF THE COMPANY

 

1.1  Establishment of the Company . In order to implement this joint venture in form and substance acceptable to all parties (the "Joint Venture"), the Parties agree that the Company shall be the operational entity used for the Joint Venture.

 

1.2  Purpose of the Company . The purpose of the Company is to:

 

(a) Establish gaming operations by distributing and maintaining slot machines in the Territory;

 

(b) Engage in any and all other conduct, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes.

 

As soon as reasonably possible after the establishment of the Company, the parties shall cause the Company to execute its written acceptance hereto whereby the terms and conditions of this Agreement shall become enforceable by and against the Company as if it were an original signatory hereto.

 

ARTICLE 2. DISTRIBUTOR LICENSE AND JOINT VENTURE CONSIDERATION.

 

2.1  Distributor License and Resource Allocation. In order to effect the purpose of the Company, pursuant to the gaming operation created by this Joint Venture for the distribution of slot machines in the Territory, HYHI and EMBM shall execute any and all documentation necessary or required by authorities in the Territory to effect a distribution license to the Company (the "License") in order to be in compliance with any and all local and federal regulatory laws, including, but not limited to, the amended terms set forth in the Third Amendment and the terms and conditions of this Article 2. Further, DEAC and EVG shall be responsible for providing any and all financial and operational resources required to execute on the Licence granted to the Company, including, but not limited to, the funding for the initial and ongoing operating costs in the minium amount of Five Hundred Thousand Dollars (USD $500,000) on or before December 31, 2016 (the "Initial Funding").

 

2.2 Joint Venture Consideration . As inducement to HYHI and EMBM to enter into this Agreement, DEAC and EVG, jointly and severally, agree that HYHI shall be entitled to receive consideration in the total amount of Ten Million Dollars (USD $10,000,000) (the "Total Consideration"), payable from the Joint Venture, as follows:

 

 
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2.2.1 Original Initial Payment . Pursuant to this Article 2.2, HYHI acknowledges the receipt of the Original Initial Payment set forth in the Recitals as payment towards the Total Consideration;

 

2.2.2   Amended and Restated Original Note . Pursuant to this Article 2.2, the Original Note, as amended, shall be further amended and restated (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 proceeding 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 proceeding the payment date, and other terms more fully described in the amended note set forth in the Amended and Restate Redeemable Note, attached hereto as Exhibit A-1;

 

2.2.3 Revenue Share Plan . Pursuant to this Article 2.2, DEAC and EGV and HYHI mutually agree to split 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 "Redeenable Note") for each such occurance, in the form and on the same terms and Matuirty Date as set forth in the Amended and Restated Redeemable Note, attached hereto as Exhibit A-1.

 

2.3  Option to the ownership of EMBM and Gaming Licenses. Within thirty (30) days of the date payment in full of the Total Consideration is made to HYHI pursuant to Article 2.2, EVG and Company shall 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 pursuant to this Article 2.3. Upon receipt by HYHI of a written notice to exercise the Option and the Option Payment from EVG or Company, HYHI shall 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, in the form attached hereto as Exhibit B-1, 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.

 

Notwithstanding the foregoing in this Article 2, in the event of a termination of this Agreement as set forth in Article 18, or if the Company is unable to provide the Initial Funding set forth in Section 2 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 described in Section 1.2 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 Redeemable Notes (the "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.

 

 
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ARTICLE 3. COMPANY FORMATION

 

The documents of formation of the Company entitled Testimonio De La Escritura Publica No. 72 (the "Formation Docuemnts") dated July 24, 2015 are attached hereto as Exhibit C-1. If any discrepancy is found between this Agreement and the Articles of Incorporation, the terms of this Agreement shall prevail and the Parties shall amend the Articles of Incorporation so as to be in accord with this Agreement.

 

ARTICLE 4. CAPITAL SUBSCRIPTION AND SHARE EXCHANGE

 

4.1  At formation, the Company had an initial authorized capital of 5,000 Honduran lempira.

 

4.2  The capital was divided into common shares of voting stock of the Company. Each share shall have a par value of 0.01 Honduran lempira. All shares issued by the Company to DEAC and issued thereafter shall be common shares of one class, which shall be assigned and transferred to EGV, pursuant to the terms of this Agreement.

 

4.3  At the time of the establishment of the Company, the Company issued a total of 100 shares at a price of 50.00 Honduran lempira per share, and the paid-in capital of the Company was the equivalent to 5,000 Honduran lempira to DEAC, which shall be assigned and transferred to EGV, pursuant to the terms of this Agreement.

 

4.4  As a result of the subscribed to shares under Article 4.3, DEAC owned ninety-nine percent (99%) and Sarah Myers, an officer and director of DEAC owned one percent (1%) of ownership interest in the Company, which shall be assigned and transferred to EGV, pursuant to the terms of this Agreement.

 

4.5  Any increase in the authorized or paid-in capital set forth in Articles 4.1 and 4.3 above, respectively, shall be done in accordance with Article 10.3(c) below.

 

4.6  The Board of Directors of the Company (the "Board of Directors") shall assess the Company's cash flow and financial situation on a quarterly basis to determine the need for additional capital in the form of debt and/or equity, which shall be approved by consent of the majoity vote of the Directors

 

ARTICLE 5. SHARE CERTIFICATE; TRANSFERS OF SHARES

 

5.1 Share certificates, when issued by the Company shall be book entry or certificate form at the discretion of the Board of Directors.

 

5.2  During the term of this Agreement, any share certificate (or book entry) issued hereunder will bear the following legend:

 

"Transfer of the shares of stock represented by this certificate (or book entry) is subject to terms of the Joint Venture Agreement dated May 20, 2016, a copy of which is on file at the principal office of the Company."

 

5.3  Any transfer of registered share(s) shall not be valid unless approved by the Board of Directors, and no transfer shall be binding on the Company unless and until the name and address of the transferee is duly entered into the Register of Shareholders following such transfer.

 

 
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ARTICLE 6. SHAREHOLDERS MEETING

 

6.1  The Board of Directors shall decide the time and place for convening of, and the matters to be transacted in, all meetings of the shareholders of the Company. Notice of all shareholders meetings shall be given to each shareholder in accordance with the Articles of Incorporation.

 

6.2  Except as otherwise required by applicable laws, the terms herein, or the Formation Documents, all actions and resolutions of the shareholders shall be adopted by the affirmative vote of a majority of the common voting shares of the Company represented at the meeting or otherwise by written consent; PROVIDED, that more than one-half the total number of issued and outstanding common voting shares of the Company shall be represented at such meeting as a quorum.

 

6.3  Notwithstanding Article 6.2 above, any of the following actions shall be adopted by the affirmative vote of more than two-thirds (2/3) of the total number of the Company's issued and outstanding shares of common stock, at a shareholders meeting or otherwise by written consent:

 

(a) removal of a director or the auditor;

 

(b)  transfer, takeover, or lease of a material part of the Company's business;

 

(c)  amendment to the Articles of Incorporation;

 

(d) merger or consolidation with another company;

 

(e)  dissolution of the Company; and

 

(f)  reduction of stated capital.

 

ARTICLE 7. DIRECTORS AND AUDITOR OF THE COMPANY

 

The Company shall have no less than three (3) directors and one (1) auditor of the Company elected in a given year, pursusant to Article 8 hereinelow.

 

ARTICLE 8. ELECTION OF DIRECTORS AND AUDITOR

 

8.1  The parties shall exercise their respective voting rights in the Company and take such other steps as are necessary so as to ensure the nomination and election of the directors and auditor of the Company as follows:

 

(a)  Two (2) directors shall be nominated by EGV, and one (1) director by HYHI;

 

(b)  The auditor shall be nominated by EGV;

 

(c)  The President shall be nominated by EGV; and

 

(d)  The Chairman shall be nominated by the mutual agreement between EGV and HYHI.

 

 
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8.2 If a party hereto wishes to change any of its nominated director(s), the President, the Chairman or the auditor, with or without cause, the other party shall vote accordingly; PROVIDED, however, that if such dismissal is without cause, the party proposing the dismissal shall indemnify and hold the Company and the other parties harmless from any and all damages and other expenses that may arise from such action.

 

8.3  In case the position of a director or the auditor of the Company becomes vacant for any reason, the parties hereto agree to elect as a replacement for such director or auditor a person nominated by the party who originally nominated the director or auditor whose position is vacant.

 

ARTICLE 9. PRESIDENT AND CHAIRMAN

 

The President shall represent the Company and shall carry on the administration of the affairs of the Company in accordance with the policies established by the Board of Directors and resolutions of the Shareholders Meeting, and the Chairman shall preside over all Board of Directors meetings and Shareholders Meetings.

 

ARTICLE 10. BOARD OF DIRECTORS

 

10.1  Board of Directors actions shall be valid only if made at a meeting held in person or by conference telephone or video, at which at least a majority of all directors then in office are present and a majority of those directors present at the meeting approve the Board of Directors action. The Board of Directors may hold meetings, both regular and special, at such time and place as it may determine. Notice of Board of Directors meetings shall be given to each director in accordance with the Articles of Incorporation.

 

10.2  Unless otherwise required by applicable laws or the Articles of Incorporation actions and resolutions taken at a meeting of the Board of Directors shall be adopted by the affirmative vote of a majority of all the directors in office.

 

10.3  Subject to Article 10.4, the following actions shall be reserved for resolution by the Board of Directors at a meeting of the Board of Directors or by majority written consent:

 

(a) To establish or change the management structure of the Company or authority of its officers and to make any decision involving basic policy of the Company;

 

(b) To approve or terminate any contract between a director and the Company;

 

(c) To issue any new shares within the scope of authorized capital;

 

(d) To recommend any distribution of the profits of the Company to shareholders as a dividend;

 

(e) To take any action or enter into any one transaction of any nature by, with, in the name of or on behalf of the Company and involving (i) an agreement, obligation or duty of the Company which is intended or reasonably expected to take more than 12 months to be fully performed or (ii) property of any nature having a book value, cost or market value, whichever is greater, in excess of USD $1,000,000 or (iii) an amount, liability or obligation of any nature owed by or to the Company in excess of USD $1,000,000;

 

(f) To approve the business plans and budgets, including the annual operating and capital expenditure budgets of the Company;

 

(g) To set up the Company's policies regarding the salaries, bonuses, severance allowances and other emoluments of directors, auditors, officers, and employees of the Company, at the discretion of the Board of Directors, provided that compensation for the directors and auditor shall be further approved by a general Shareholders Meeting;

 

 
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(h) To approve any contract between the Company and a shareholder of the Company or its affiliate;

 

(i) To borrow monies, issue guarantees, provide security interests on the assets of the Company or to take any other actions to create indebtedness of the Company whether contingent or not;

 

(j) To appoint the auditor and the legal counsel of the Company;

 

(k) To appoint domestic and export sales agents and generally determine domestic and export sales policy as needed;

 

(l) To approve the entering into any arrangement, agreement or transaction which could reasonably be expected to materially adversely affect any interest of the Company;

 

(m) To approve any collective bargaining agreement with employees; and

 

(n) Other important matters relating to the management of the Company, the acquisition or disposition of land or other important assets (by whatever means).

 

10.4  Non-standing (former) directors shall receive no other compensation for services to the Company as director except from unpaid compensation or reimbursement for expenses directly related to fulfilling their positions as directors during their elected period.

 

10.5  The Company shall use best efforts to take all steps to ensure that no director shall be liable, in damages or otherwise, to the Company or to any of the parties for any act or omission performed or omitted by such director pursuant to the authority granted by this Agreement, except if such act or omission results from gross negligence, willful misconduct or bad faith. The Company shall save, indemnify, defend and hold harmless each director to the fullest extent permitted under the applicable Honduras law and regulations, including without limitation, from and against any and all claims or liabilities of any nature whatsoever, including, but not limited to, reasonable attorneys' fees, arising out of or in connection with any action taken or omitted by such director pursuant to the authority granted by this Agreement, except where attributable to the gross negligence, willful misconduct or bad faith of such director or such director's agents. Each director shall be entitled to rely on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any act or omission of such director in reliance on such advice shall in no event subject such director to liability to the Company or any party provided there has not been gross negligence, willful misconduct or bad faith by such counsel, public accountants or other independent experts. No director, in his or her capacity as such, shall owe any fiduciary duty to the Company or the parties and all fiduciary duties that would otherwise be implied by law are hereby expressly disclaimed to the fullest extent permitted under the applicable laws. No party shall owe any fiduciary duty to the Company or the other parties and all fiduciary duties that would otherwise be implied by law are hereby expressly disclaimed to the fullest extent permitted under the applicable laws. Each party expressly acknowledges and agrees that except as otherwise provided herein or in the Related Agreements or any other agreement among parties, other parties (and directors who may be affiliated with such parties) may not engage in activities competitive with those of the Company, and may pursue business opportunities that may also be available to the Company.

 

ARTICLE 11. AUDITOR

 

The auditor shall perform the legally required functions of that statutory position, if any, pursuant to Honduras law, including without limitation, investigation of the business decisions of the directors as well as auditing of the books of account and records of the Company.

 

ARTICLE 12. INDEPENDENT AUDITOR

 

DEAC shall appoint a firm of independent certified public accountants recognized and licensed to practice in the U.S. which shall act as an independent auditor (the "Independent Auditor") of the Company's operations related to consolidated financials of DEAC.

 

 
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ARTICLE 13. ACCOUNTING

 

13.1  The fiscal year of the Company shall commence on January 1 of each year and end on December 31 of the same year; PROVIDED, however, that the first fiscal year of the Company shall commence as of the date of establishment of the Company pursuant hereto and end on the following December 31.

 

13.2  The Company shall keep accurate books of account and financial and related records in accordance with generally accepted Honduras and United States generally accepted accounting principles, standards and procedures, consistently applied.

 

13.3  At the end of each annual fiscal year of the Company, the books of account and records of the Company shall be audited, at the expense of the Company, by the Independent Auditor. The Independent Auditor shall prepare for and supply to the parties certified balance sheets, profit and loss statements and other financial reports suitable for use by each of the parties hereto in connection with its financial and tax reports within three months of the end of the fiscal year. Such statements and reports shall be in both the Spanish and English languages.

 

13.4  Promptly after the end of each quarter the Company shall prepare and submit to each party, in a form satisfactory to the parties and at the expense of the Company, the balance sheet and profit and loss statement of the Company in the Spanish and English languages in respect of the preceding quarter.

 

13.5  The Company shall make available at its head office to each of the parties hereto, or to their designated representative(s), the books of account and records of the Company, at such reasonable times as any party hereto may so request.

 

ARTICLE 14. BUSINESS AND OPERATION OF THE COMPANY

 

The Board of Directors will develop promptly a business plan each fiscal year for the Company, to be mutually agreed upon by the parties (the "Operating Plan"). No later than forty-five (45) days prior to the commencement of each fiscal year of the Company, EGV and HYHI will mutually agree as to the Operating Plan for the ensuing fiscal year, which shall include projections of revenue, expenses and net income on a quarterly basis. EGV and HYHI agree to use their best efforts in good faith to agree on such Operating Plan, taking into account, all relevant business factors relating to the Company and its business, which factors shall include, but not be limited to, the Operating Plan and the Company's performance for recent prior periods, the size and the growth rates of the gaming market in Honduras, the competitive environment in Honduras, and the prevailing revenues similar to those offered by Honduras.

 

ARTICLE 15. CONFIDENTIALITY OF INFORMATION AND NON-COMPETE

 

15.1  Each party hereto agrees to keep secret and confidential all information obtained from another party hereto or the Company which is designated or may be considered as confidential by such party or the Company, as the case may be. The parties agree to take all necessary precautions in a manner acceptable to the party furnishing the confidential information to keep secret such information and to restrict its use as aforesaid; provided, that the above shall not apply to information which is or becomes part of the public domain through no fault of the disclosing party, nor shall the above restrict or prohibit the disclosure of such information to competent government authorities as is required to bring about the purposes intended by this Agreement.

 

15.2  The parties hereto shall take all necessary steps to ensure that their directors, officers, employees, agents and subcontractors, if any, will comply in all respects with this Article 15.

 

15.3  Such obligations, as are undertaken by the parties hereto pursuant to Article 15, shall survive termination of this Agreement and shall remain in effect and be binding on the termination of this Agreement except for such information as shall become part of the public domain or is received from an independent source through no fault of the party wishing to disclose.

 

 
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15.4  Each of the parties hereto covenants and agrees that during the term of this Agreement and for a period of five (5) years after a termination or excerised option date, the parties shall not own, manage, or be contracted by a competing business of this Joint Venture within 250 miles of the Territory, or recruit or employ (whether as an employee or independent contractor) any of employees or independent contractors of the Company, except in the event of a termination set forth in Section 18 or exercised option, in which the prevailing party (or parties) shall not be effected by the terms of non-compete set forth in this provision.

 

ARTICLE 16. TAXES

 

Any sum required under Honduras tax laws to be withheld by the Company for the account of a non-Honduras based party from payments due to such party shall be borne by the party and shall be withheld and promptly paid by the Company to the appropriate tax authorities, and the parties hereto shall cause the Company to furnish such party with official tax receipts or other appropriate evidence issued by the Honduras tax authorities sufficient to enable it to support a claim for credit, in respect of any sum so withheld, against income taxes imposed by its jurisdiction of incorporation.

 

ARTICLE 17. RIGHT OF FIRST REFUSAL

 

17.1  Before any shares of common stock of the Company (the "Shares") held by a party to this Agreement or any transferee of such party (either being sometimes referred to herein as the "Holder") may be sold or otherwise transferred (including transfer by gift or operation of law), EGV or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Article (the "Right of First Refusal").

 

17.2  The Holder of the Shares shall deliver to EGV a written notice (the "Notice") stating: (A) the Holder's bona fide intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee ("Proposed Transferee"); (C) the number of Shares to be transferred to each Proposed Transferee; and (D) the terms and conditions of each proposed sale or transfer. The Holder shall offer the Shares at the same price (the "Offered Price") and upon the same terms (or terms as similar as reasonably possible) to EGV or its assignee(s).

 

17.3  At any time within thirty (30) days after receipt of the Notice, EGV and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined accordance with Article 17.4 below.

 

17.4  The purchase price ("Purchase Price") for the Shares purchased by EGV or its assignee(s) under this Article shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of EGV in good faith.

 

17.5  Payment of the Purchase Price shall be made, at the option of EGV or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to EGV (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

 

17.6  If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by EGV and/or its assignee(s) as provided in this Article, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 60 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Article shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to EGV, and EGV and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

 

 
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ARTICLE 18. TERM AND TERMINATION

 

18.1  The term of this Agreement shall begin as of the Effective Date (as defined in Article 21.2) and shall continue in force and effect for an indefinite term thereafter, until the Company shall be dissolved or otherwise cease to exist as a separate entity, or until this Agreement is sooner terminated pursuant to the provisions of this Article 18.

 

18.2  This Agreement is terminable by any party upon written notice to the other parties:

 

(a) if another party shall be or become incapable for a period of ninety (90) consecutive days of performing any of its obligations under this Agreement because of force majeure as defined in Article 22; or

 

(b) if another party or its creditors or any other eligible party shall file for such party's liquidation, bankruptcy, reorganization, compulsory composition, or dissolution, or if the party is unable to pay any debts as they become due, has explicitly or implicitly suspended payment of any debts as they become due (except debts contested in good faith) or if the creditors or the party have taken over its management, or if the relevant financial institutions have suspended the party's clearing house privileges, or if any material or significant part of the party's undertaking, property or assets shall be intervened in, expropriated, or totally or partially confiscated by action of any government.

 

(c) upon EGV or EMBM's material breach of terms set forth in Section 2 that remains uncured for a period of ninety (90) days following receipt by the breaching party of written notice thereof from the nonbreaching party;

 

(d) upon a merger or consolidation of DEAC in which its shareholders do not retain a majority of the voting power in the surviving corporation, or a sale of all or substantially all of DEAC's assets;

 

(e) at any time in the event that cumulative losses of the Company for any calendar year commencing on January 1, 2016 and thereafter, equal or exceed 120% of the cumulative yearly losses mutually agreed to by DEAC and HYHI as set forth in the Operating Plan, as reflected in the Company's financial statements prepared in accordance with Article 13 above;

 

(f) if any enactment of law of Honduras in the reasonable opinion of DEAC, (i) make performance of this Agreement unreasonably expensive or unreasonably difficult, or (ii) significantly alter the rights and obligations of the parties from those agreed and contemplated by this Agreement and/or any agreements related hereto, or (iii) significantly interfere with the benefits contemplated by this Agreement and/or any agreements related hereto; or

 

(g) in the event any material term or provision of this Agreement shall for any reason be deemed invalid, illegal or unenforceable in any respect, by giving at least thirty (30) days' prior notice to the other parties.

 

18.4  This Agreement may also be terminated pursuant to Article 20.3 (lack of governmental approval) and the Company dissolved thereafter.

 

18.5  Nothing in this Article shall prevent a party from enforcing its rights which may be available under the other provisions of this Agreement or applicable law after the Effective Date and date of termination, as applicable.

 

 
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ARTICLE 19. RESOLUTION OF DISPUTES, GOVERNING LAW AND LANGUAGE

 

19.1  It is agreed that in case any controversy or claim arises out of or in relation to this Agreement or with respect to a breach hereof, the parties shall seek to solve the matter amicably through discussions between the parties.

 

19.2     If the parties cannot resolve such controversy or claim amicably, such controversy or claim shall be finally settled by binding arbitration in Orange County, Florida under the Commercial Arbitration Rules of the American Arbitration Association by three arbitrators appointed in accordance with such Rules. Judgment on the award rendered by a majority of the arbitrators may be entered in any court of competent jurisdiction. The cost of the arbitration, including administrative and arbitrators' fees, shall be paid by the losing party, as determined by the arbitrators as part of their findings. Each party shall bear the cost of its own attorneys' fees and expert witness fees. The parties may also apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary, without breach of this arbitration provision and without any abridgment of the powers of the arbitrator.

 

19.3  The validity, performance, construction, and effect of this Agreement shall be governed by the laws of Florida.

 

19.4  This Agreement is executed in the English language. In the event of any difference, discrepancy or conflict between the English and Spanish versions of this Agreement, the English version shall be controlling in all respects.

 

ARTICLE 20. ASSIGNABILITY

 

This Agreement and each and every covenant, term and condition hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors, but neither this Agreement nor any rights and obligations hereunder shall be assignable or delegable directly or indirectly by any party without the prior written consent of the other parties except for the transfer of Shares pursuant to Article 17.

 

ARTICLE 21. GOVERNMENT APPROVAL AND EFFECTIVE DATE

 

21.1  HYHI and EMBM shall exert its best efforts to obtain all approvals of the government of Honduras at its reasonable expense necessary to enable the non-Honduras based parties' investment into the Company and to enable all the other purposes of this Agreement to be fully carried out, upon the terms and conditions provided for in this Agreement. The non-Honduras based parties shall assist HYHI and EMBM in obtaining such government approvals and provide such information and documents as HYHI and EMBM shall reasonably request in obtaining such approvals. HYHI and EMBM shall keep the non-Honduras based parties fully informed in writing as to the status of such approval procedures. HYHI and EMBM shall provide the non-Honduras based parties with copies of all correspondence and documents transmitted to, and received from, the governmental authorities relating to such approval. HYHI and EMBM shall advise approval of this Agreement and shall transmit to the non-Honduras based parties a copy of any government documents received by HYHI and EMBM indicating the date of such approval and the terms and conditions thereof; provided, however, that any variation of the terms and conditions hereof which may be required to be made as a condition of such government approvals should be subject to the approval and acceptance of the parties hereto.

 

21.2  This Agreement shall come into effect upon the date the duly authorized representatives of the parties hereto have added their signatures or names hereto (the "Effective Date"). Notwithstanding the foregoing, the provisions of this Agreement which require government approval shall not become enforceable until all necessary and appropriate government approvals of this Agreement are obtained in form and substance acceptable to the parties hereto.

 

 
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21.3  Notwithstanding any other provision of this Agreement, should the government approvals pursuant to Article 21.1 not be obtained within six (6) months of the Effective Date, then upon written notice to the other parties, any party may terminate this Agreement and this Agreement shall become null and void and no rights or liabilities shall arise in or against either party hereto specifically as a result of such termination, except as otherwise provided for in this Agreement.

 

21.4  If any further government review and approval of this Agreement or of any amendment hereto is required under the laws or regulations or other legal authority of Honduras, HYHI and EMBM shall keep the non-Honduras based parties fully informed as to the status of such approval procedures. HYHI and EMBM shall provide the non-Honduras based parties with copies of all correspondence and documents transmitted to and received from the governmental authorities relating to such approval.

 

ARTICLE 22. FORCE MAJEURE

 

No party hereto shall be liable to another party for any loss, injury, delay, damages or other casualty suffered or incurred by the latter due to strikers riots, storms, fires, explosions, acts of God, war, action of any government or any other cause beyond the reasonable control of the party ("force majeure"), and any failure or delay by any party hereto or performance of any of its obligations under this Agreement due to one or more of the foregoing causes shall not be considered a breach of this Agreement. The party suffering such force majeure shall notify the other parties in writing promptly after the occurrence of such force majeure and shall, to the extent reasonable and lawful, use its best efforts to remove or remedy such cause.

 

ARTICLE 23. REPRESENTATIONS AND WARRANTIES

 

23.1  Each party represents and warrants to the other party that;

 

(a) it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction wherein it is organized and existing;

 

(b) it has all necessary corporate power and authority to enter into this Agreement and to perform all of the obligations to be performed by it hereunder;

 

(c) subject to the obtaining of all required government approvals of this Agreement, this Agreement constitutes a valid and legally binding obligation of the party and will be enforceable against he party in accordance with its terms;

 

(d) this Agreement, and the consummation of the transactions contemplated hereby have been duly authorized and approved by and on behalf of the party by all requisite corporate actions; and

 

(e) the execution and delivery of this Agreement, and the performance of the transactions contemplated hereby, and the fulfillment of and compliance with the terms and conditions hereof, do not (i) violate any provision of law, statute, rule or regulation to which the party is subject, (ii) violate any judgment, order, writ, injunction or decree of any court applicable to the party, (iii) result in the breach of, or be in conflict with, any term, covenant, condition or provision of, or affect the validity, enforceability and subsistence of any agreement, or lease or other commitment to which the party is a party and which would materially and adversely affect the party, or (iv) result in the creation or imposition or any lien, pledge, mortgage, claim, charge or encumbrance upon any assets of the party.

 

23.2 Each party agrees to hold the other parties harmless and to indemnify the other parties against any and all liabilities, losses, costs, damages, commissions and expenses which the other party may sustain by reason of the breach of any of representations and the warranties set forth in this Agreement.

 

 
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ARTICLE 24. NOTICE

 

24.1  Except as otherwise provided in this Agreement, all notices required or permitted to be given hereunder shall be in writing and shall be valid and sufficient if dispatched by registered airmail (postage prepaid), delivered personally, or sent by telex, facsimile or cable to the following addresses:

 

If to EGV:

Elite Data Services, Inc.

4447 N. Central Expressway, Suite 110-135  

Dallas, TX 75205  

Phone: (972) 885-3981  

Attn: Chief Operating Officer  

Email: corp@edscompanies.com

 

If to DEAC:

Elite Data Services, Inc.

4447 N. Central Expressway, Suite 110-135  

Dallas, TX 75205  

Phone: (972) 885-3981  

Attn: Chief Operating Officer  

Email: corp@edscompanies.com

 

If to Company:

Elite Data Services, Inc.

4447 N. Central Expressway, Suite 110-135  

Dallas, TX 75205  

Phone: (972) 885-3981  

Attn: Chief Operating Officer  

Email: corp@edscompanies.com

 

If to HYHI:

H Y H Investment, S.A.

50496189779 Isles de la Bahia  

Honduras, C.A. 34101

 

If to EMBM:

H Y H Investment, S.A.  

50496189779 Isles de la Bahia  

Honduras, C.A. 34101

 

24.2  Each party hereto may change its address by notice given to the party hereto in the manner set forth above. Notices given as herein provided shall be considered effective seven (7) days after the registered postage pre-paid mailing thereof, or on the day of personal delivery, or the day after sending if by telex, facsimile or cable, whichever occurs first with confirmation copy sent by registered mail.

 

 
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24.3  All notices, communications, evidences, reports, opinions and other documents given under or in connection with this Agreement, unless submitted in the English language, shall be accompanied by one English translation thereof; PROVIDED, that the English version of all such notices, communications, evidences, reports, opinions and other documents shall govern in the event of any conflict with the non-English version thereof.

 

ARTICLE 25. EXPENSES

 

25.1  Each party shall bear its own attorney fees and other expenses incurred to execute this Agreement.

 

25.2  All fees, related to incorporation of the Company including but not limited to fees paid to governmental bodies, shall be borne by the parties in proportion to their respective shares in the Company.

 

ARTICLE 26. ENTIRE AGREEMENT

 

This Agreement, and all related agreements, embodies the entire agreement of the parties with respect to the subject matter hereof and supersedes and cancels any and all prior understandings or agreements, verbal or otherwise, in relation hereto, which may exist between the parties. No oral explanation or oral information by any of the parties hereto shall alter the meaning or interpretation of this Agreement. No amendment or change hereof or addition hereto shall be effective or binding on any of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the parties hereto.

 

ARTICLE 27. UNENFORCEABLE TERMS

 

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 portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

ARTICLE 28. NON-WAIVER

 

The failure or delay of any party to require performance by the other parties of any provision of, or of any right or obligation under, this Agreement, shall not constitute a waiver thereof, nor shall such affect that party's right to thereafter require performance of such or any other provision, right or obligation.

 

ARTICLE 29. DISCLAIMER OF AGENCY

 

This Agreement shall not be deemed to constitute any party hereto the agent of the other parties, nor shall it be deemed to constitute the Company an agent of any party hereto.

 

ARTICLE 30. HEADINGS

 

The headings in this Agreement have been inserted for convenience of reference only and are not to be used in construing or interpreting this Agreement.

 

ARTICLE 31. COUNTERPARTS

 

This Agreement may be executed in any number of counterparts. Any such counterpart shall constitute a full and original agreement for all purposes.

 

[Signature Page to Follow]

 

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

 

DEAC EGV
ELITE DATA SERVICES INC. ELITE GAMING VENTURES LLC

 

 

 

 

 

/s/ Charles Rimlinger

 

 

/s/ Charles Rimlinger

 

Charles Rimlinger

 

 

Charles Rimlinger

 

Chief Executive Officer

 

 

Chief Executive Officer

 

 

HYHI

 

 

EMBM

 

H Y H INVESTMENTS S.A.

EL MAR MUERTO BEAUTY MINERAL, S.A.

/s/ Wilson Stevenson

 

 

/s/ Wilson Stevenson

 

Wilson Stevenson

 

 

Wilson Stevenson

 

Owner

 

 

Owner

 

 

COMPANY

 

 

 

 

ELITE HOLDINGS S.A.

/s/ Wilson Stevenson

 

 

 

Sarah Myers

 

 

 

President

 

 

 

  

 
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EXHIBIT A-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 $4,900,000.00

 

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 H Y H INVESTMENTS, S.A. , a Honduras corporation and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of FOUR MILLION NINE HUNDRED THOUSAND DOLLARS (U.S. $4,900,000.00), at ten percent (10%) interest per annum commencing on January 1, 2016 (the " Effective Date "), due and payable to Holder by Company as follows: (A) two (2) separate payments of Four Hundred Fifty Thousand Dollars (USD $450,000), plus accrued interest, due on July 1, 2016 and October 1, 2016, respectively (each a " Maturity Date "), for a total of Nine Hundred Thousand Dollars (USD $900,000), and payable in cash or convertible into shares of common stock of the Company at the discreation of the Holder at a conversion price equal to the lesser of $0.01 per share or fifty-eight percent (58%) to the ten (10) trading day average closing price immediately proceeding 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, on the first day of each quarter beginning with January 1, 2017 and ending on January 1, 2019 (each a " Maturity Date "), pursuant to the terms of First Amendment to the Original Securities Purchase Agreement dated even date herewith between Company and Holder, of which this Note is made apart. 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 three business day written notice of the Note's transfer. 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, 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 "), during 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).

 

(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. 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.

 

(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.

 

 
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(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.

 

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.

 

 
21
 

 
 

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

 

(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

 

(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;

 

 
22
 

 
 

(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.

 

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.

 

 
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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 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.

 

14.  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.

 

15. 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.

 

 
24
 

 
 

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 20, 2016

By: /s/ Charles Rimlinger

 

 

 

Charles Rimlinger,

 

 

 

Chief Executive Officer

 

 

 
25
 

  

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 B-1

 

FORM OF ASSIGNMENT OF OWNERSHIP INTEREST  

( El Mar Muerto Beauty Mineral S.A. )

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, H Y H INVESTMENTS S.A., a Honduras corporation (hereinafter referred to as "Assignor"), hereby assigns, sets over and transfers to ELITE HOLDINGS S.A., a Honduras corporation (hereinafter referred to as "Assignee"), one hundred percent (100%) of the ownership interest of EL MAR MUERTO BEAUTY MINERAL, S.A., a Honduras corporation, including, but not limited to, any and all assets and liabilities (the "EMBM"), effective as of the date hereof, and

 

TO HAVE AND TO HOLD the same unto the Assignee, it respective successors and assigns forever; and

 

Assignor does for itself, and its successors and assigns, covenant and agree with Assignee to specifically warrant and defend title to the said ownership interest of EMBM (hereinafter referred to as the "Assigned Ownership Interests") assigned hereby unto the Assignee, its successors and assigns, against any and all claims thereto by whomsoever made by or through the Assignor; and

 

Assignor does, for itself, and its successors and assigns, warrant and represent to the Assignee that the title conveyed is good, its transfer is rightful; that no consent or approval by any other person or entity is required, other than the approval of board of directors of Assignor, which has already been obtained, for the valid assignment by the Assignor to the Assignee of the Assigned Ownership Interests referenced herein; and that the Assigned Ownership Interests are, have been, and shall be delivered free and clear from any security interest or other lien or encumbrance; and

 

Assignor does, for itself, and its successor and assigns, warrant and represent to the Assignee that there are no attachments, executions or other writs of process issued against the Assigned Ownership Interests conveyed hereunder; that it has not filed any petition in bankruptcy nor has any petition in bankruptcy been filed against it; and that it has not been adjudicated a bankrupt;

 

Assignor and Assignee acknowledge that the assignment and transfer of the Assigned Ownership Interest being effected herein is pursuant to an exercised option between the parties as set forth in that certain Joint Venture Agreement dated May 20, 2016; and

 

Assignor does, for itself and its successors, and assigns, warrant that it will execute any such further assurances of the foregoing warranties and representations as may be requisite.

 

[Signature Page to Follow]

 

 
27
 

 

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be executed as of this ____ day of ____________ 20____.

 

 

ASSIGNOR

 

H Y H INVESTMENTS S.A.

 

By: ________________________________

 

Print Name: __________________________

 

Title: _______________________________

 

ASSIGNEE

 

ELITE HOLDINGS S.A.

 

By: ________________________________

 

Print Name: __________________________

 

Title: _______________________________

 

 
28
 

  

EXHIBIT C-1

 

ARTICLES OF INCORPORATION OF ELITE HOLDINGS S.A.

 


See Attached.

 

 

 

 

 

 

29


EXHIBIT 10.76

 

ASSIGNMENT OF OWNERSHIP INTERESTS

(Autoglance LLC and Classified Rides)

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ELITE DATA SERVICES INC. , a Florida corporation (OTC:DEAC) (hereinafter referred to as "Assignor"), hereby assigns, sets over and transfers to ELITE DATA MARKETING LLC , a Florida limited liability company (hereinafter referred to as "Assignee"), and a subsidiary of the Assignor, effective as of the date hereof, (A) Assignor's ownership interest in www.classifiedride.com , an online classified listing website, equal to an aggregate total of one hundred percent (100%) of the ownership interest (the "ClassifiedRide Asset"), acquired by Assignor from Baker Myers and Associates LLC, on or about January 13, 2014, and (B) a certain amount of Assignor'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") of Autoglance, including, but not limited to, the majority control over all owned assets of Autoglance, acquired by Assignor from Baker Myers and Associates LLC, on or about January 15, 2014, and

 

TO HAVE AND TO HOLD the same unto the Assignee, it respective successors and assigns forever; and

 

Assignor does for itself, and its successors and assigns, covenant and agree with Assignee to specifically warrant and defend title to the said ownership interest of ClassifiedRide Asset and the Autoglance Units (collectively hereinafter referred to as the "Assigned Ownership Interests") assigned hereby unto the Assignee, its successors and assigns, against any and all claims thereto by whomsoever made by or through the Assignor; and

 

Assignor does, for itself, and its successors and assigns, warrant and represent to the Assignee that the title conveyed is good, its transfer is rightful; that no consent or approval by any other person or entity is required, other than the approval of board of directors of Assignor, which has already been obtained, for the valid assignment by the Assignor to the Assignee of the Assigned Ownership Interests referenced herein; and that the Assigned Ownership Interests are, have been, and shall be delivered free and clear from any security interest or other lien or encumbrance; and

 

Assignor does, for itself, and its successor and assigns, warrant and represent to the Assignee that there are no attachments, executions or other writs of process issued against the Assigned Ownership Interests conveyed hereunder; that it has not filed any petition in bankruptcy nor has any petition in bankruptcy been filed against it; and that it has not been adjudicated a bankrupt;

 

Assignor and Assignee acknowledge that the assignment and transfer of the Assigned Ownership Interest being effected herein is pursuant to a plan of reorganization of the corporate structure of the Assignor, in the form of a parent and subsidiary arrangement and therefore does not create any unnecessary tax burden on either party; and

 

Assignor does, for itself and its successors, and assigns, warrant that it will execute any such further assurances of the foregoing warranties and representations as may be requisite.

 

 
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IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be executed as of this 20th day of May, 2016.

 

 

ASSIGNOR  

 

ELITE DATA SERVICES INC.

 

     
By:

/s/ Charles Rimlinger

 

 

Charles Rimlinger

 

 

Chief Executive Officer

 

 

 

 

 

ASSIGNEE  

 

ELITE DATA MARKETING LLC

 
By:

/s/ Charles Rimlinger

Charles Rimlinger

Manager

 

 

2


EXHIBIT 10.77

 

DEFINITIVE AGREEMENT

 

by and among

 

PROPERTIES OF MERIT INC.

 

[THE CONTROLLING STOCKHOLDERS OF PROPERTIES OF MERIT INC.]

 

AND

 

ELITE DATA SERVICES INC.

 

[THE CONTROLLING STOCKHOLDERS OF ELITE DATA SERVICES INC.]

 

dated as of May 20, 2016

 

 
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DEFINITIVE AGREEMENT

 

THIS DEFINITIVE AGREEMENT , dated as of May 20, 2016 (this " Agreement ") by and among PROPERTIES OF MERIT INC. , a Nevada corporation (" POM "), and the entities and/or individuals listed on Schedule 1.1 attached hereto (collectively, the " POM Controlling Shareholder "), and ELITE DATA SERVICES INC ., a Florida corporation publicly-traded on the US Over-the-Counter (OTC) Market (" DEAC "), and the entity listed on Schedule 1.1 (together, the " DEAC Controlling Shareholders ") (each a "Party" and, collectively referred to as the "Parties").

 

RECITALS

 

WHEREAS , the POM Controlling Shareholders own in the aggregate a majority of the issued and outstanding shares of POM as set forth in Schedule 1.3, such shares being hereinafter referred to as (the " POM Shares ");

 

WHEREAS , POM owns one hundred (100%) percent of the mineral and production rights ("POM Rights"), as set forth in Section 3.3 herein below;

 

WHEREAS , the DEAC Controlling Shareholders own a majority of the issued and outstanding voting shares of DEAC as set forth in Schedule 1.3, such shares being hereinafter referred to as (the " DEAC Shares ");

 

WHEREAS, POM and the POM Controlling Shareholders, and DEAC and the DEAC Controlling Shareholders collectively believe it is in their respective best interests to have DEAC acquire POM as a subsidiary of DEAC in the form of a business combination (the " Acquisition "), and do hereby mutually agree to consummate a share exchange transaction contemplated herein, in the form and structure set forth in Article I herein below;

 

NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto agree as follows:

 

AGREEMENT

 

This Agreement shall confirm the mutual understandings by and between the Parties hereto with respect to the transactions to be completed as herein below. None of the Parties shall be bound by any oral or written statements nor any correspondence during the course of negotiations between the Parties, not otherwise specified or stipulated in this Agreement. This Agreement, when executed, shall supersede any and all of the terms and conditions set forth in the previously Letter of Intent executed on or about March 10, 2016. This Agreement shall be in full force and effect from the date of execution with respect to all represented terms and conditions, subject to certain corporate actions and/or documents which may require additional time to complete and/or execute, all of which shall be completed by a mutually agreed upon closing date as defined herein.

 

ARTICLE I

 

ACQUISITION OF POM; SHARE EXCHANGE

 

Section 1.1 Acquisition of POM . Upon the terms and subject to the conditions set forth in this Agreement, DEAC shall acquire, from POM, a certain percentage of the ownership interest in POM, in a series of closings in the form of one or more share exchanges, upon the closing of all of which POM shall become a wholly owned subsidiary of DEAC, after the final closing has occurred, as described and set forth in Schedule 1.1 hereto.

 

 
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Section 1.2 Agreement to Exchange POM Shares for New DEAC Shares . Pursuant to Section 1.1 hereinabove, (i) POM shall assign, transfer, convey and deliver the POM Shares to the Escrow Agent (as hereinafter defined); and in consideration and exchange therefor, DEAC shall; (ii) issue and deliver the number of shares of Series B Convertible Preferred Stock (the "New DEAC Shares") to POM, in such amounts as described and set forth in Schedule 1.1 hereto (collectively referred to as the "Share Exchange").

 

Section 1.3 Capitalization at the Closing. On the initial Closing Date (as defined below), immediately before the consummation of the Share Exchange, DEAC shall have authorized capital stock of 500,000,000 shares of Common Stock, $.0001 par value per share, of which approximately 130,103,298 shares of Common Stock shall be issued and outstanding, and a total of 250,000,000 shares of Preferred Stock, $.0001 par value per share, of which not more than 2,000,000 shares of Preferred Stock shall be issued and outstanding (the "DEAC Capitalization").

 

Section 1.4 Initial Closing and Subsequent Closings; Actions at such Closings .

 

(a) The initial closing of the Share Exchange (the " Closing ") shall take place at 5:00 p.m. E.S.T. on or before May 27, 2016 or other mutually agreed to time (the " Closing Date "), at the offices of DEAC with Antony M. Santos, Esq., acting as the Escrow Agent for this transaction (" Escrow Agent "), pursuant to the the terms of the Escrow Agreement defined herein below, with subsequent closings (also referred to herein as a " Closing ") at such other Closing Date, as described and set forth in Schedule 1.1 hereto. Each Closing shall include a separate Closing Certificate (the " Closing Certificate ") from both DEAC and POM evidencing compliance with the conditions of Closing pursuant to Article V and VI and the requirements for a closing as set forth in Schedule 1.1, 1.2, 1.3 and 1.4, attached hereto;

 

(b) At the Closing and each other subsequent Closing as set forth in Schedule 1.1 hereto: (i) POM shall deliver to the Escrow Agent the share certificates representing the POM Shares to be allotted in the amounts as described in Schedule 1.2 hereto, accompanied by appropriate voting powers and a share transfer instrument duly executed in blank; (ii) in full consideration and exchange for the POM Shares, DEAC shall issue and deliver to the Escrow Agent two or more stock certificates representing the New DEAC Shares to be allotted in the amounts as described in Schedule 1.2 hereto (each referred to as " Escrowed Shares " and collectively referred to as the " Escrowed Shares "), to be further distributed in accordance with the Escrow Agreement (the "Escrow Agreement" which shall mean the Escrow Agreement entered into by and among POM, POM Controlling Shareholders, DEAC, and DEAC Controlling Shareholder, and the Escrow Agent with respect to the Escrowed Shares, in the form attached hereto as Exhibit A with only such changes as shall be in form and substance satisfactory to the parties, acting reasonably).

 

 
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ARTICLE II  

 

REPRESENTATIONS AND WARRANTIES OF DEAC AND THE DEAC CONTROLLING SHAREHOLDER

 

Each of DEAC and the DEAC Controlling Shareholder (where specifically included) hereby, severally and not jointly, represents, warrants and agrees that all of the statements in the following subsections of this Section 2 are true and complete as of the date hereof, and will, except as contemplated by this Agreement, be true and complete as of the Closing Date as if first made on such date:

 

Section 2.1 Disclosure Schedules.

 

The disclosure schedules attached hereto as Schedule 2.1 through 2.22, if applicable (the " DEAC Disclosure Schedules ") are divided into sections that correspond to the sections of this Section 2. The DEAC Disclosure Schedules comprise of lists of all exceptions to the truth and accuracy in all material respects of, and of all disclosures or descriptions required by, the representations and warranties set forth in the remaining sections of this Section 2. For purposes of this Section 2, any statement, facts, representations, or admissions contained in the public filings made by DEAC with the United States Securities and Exchange Commission at least five (5) business days prior to the date of this Agreement (" Public Reports "), are deemed to be included in the DEAC Disclosure Schedules and all such information is deemed to be fully disclosed to POM and the POM Controlling Shareholders, except for (A) any information set forth in any "risk factor" or "forward-looking statements" section contained in such Public Reports, (B) any other forward-looking statements contained in such Public Reports that are of a speculative nature as to future developments. For purposes of this Agreement, "to the best of our knowledge" or similar phrase(s) shall mean that such person shall have current actual knowledge of a condition or event, or have received notice that would give rise to current actual knowledge of such condition or event.

 

Section 2.2 Corporate Organization.

 

(a) DEAC is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and currently proposed to be conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by DEAC or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing does not have and would not reasonably be expected to have, individually or in the aggregate a material adverse effect on the business, operations, properties, assets, condition or results of operation of DEAC; and

 

(b) Each of the DEAC's Subsidiaries is a corporation, limited liability company or other legal entity duly organized, validly existing and (where such term is of legal significance) duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and currently proposed to be conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by such Subsidiary or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing does not have and would not reasonably be expected to have, individually or in the aggregate a material adverse effect on the business, operations, properties, assets, condition or results of operation of such Subsidiary.

 

(c) Copies of the Articles of Incorporation and bylaws of DEAC with all amendments thereto to the date hereof (the "DEAC Charter Documents "), have been furnished to POM, and such copies are accurate and complete as of the date hereof. The minute books of DEAC are current as required by law, contain the minutes of all meetings of the Board of Directors and stockholders of DEAC from its date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the Board of Directors and stockholders of DEAC. DEAC is not in violation of any of the provisions of the DEAC Charter Documents.  

 

 
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Section 2.3 Capitalization of DEAC . On the initial Closing Date, immediately before the consummation of the Share Exchange, the entire authorized capital stock of DEAC consisted of 500,000,000 shares of Common Stock, at par value of $0.0001, of which approximately 130,103,298 shares of Common Stock are issued and outstanding and 500,000,000 shares of Preferred Stock, at par value of $0.0001, of which 3,000,000 shares of Preferred Stock are issued and outstanding, of which the ownership rights are stated in Schedule 1.1 which constitutes all of the DEAC Shares, commitments and conversion rights for equity of DEAC which will be issued and outstanding. Each such share is duly authorized, validly issued, fully paid and non-assessable and was not issued in violation of any pre-emptive rights. The DEAC Shares are the sole outstanding shares of capital stock of DEAC and there are no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of DEAC. In addition, there are no outstanding contractual obligations of DEAC (i) to repurchase, redeem or otherwise acquire any shares of capital stock of DEAC or (ii) to make any investment in any other person or entity.

 

Section 2.4 Subsidiaries and Equity Investments . DEAC does not directly or indirectly own any capital stock or other securities of, or any beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation, limited liability company, partnership, limited partnership, joint venture or other company, person or other entity, including without limitation any Subsidiary of DEAC except for the Subsidiaries set forth in Schedule 2.4, attached hereto. Each of the Subsidiaries of DEAC is wholly-owned by the DEAC, directly or indirectly, free and clear of any liens. For purposes of this Agreement, a "Subsidiary" of a company means any entity in which, at the date of this Agreement, such company or any of its subsidiaries directly or indirectly owns any of the capital stock, equity or similar interests or voting power.

 

Section 2.5 Authorization and Validity of Agreements . Each of DEAC and the DEAC Controlling Shareholder has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by DEAC and the DEAC Controlling Shareholder, and the consummation by DEAC and by the DEAC Controlling Shareholder of the transactions contemplated hereby, have been duly authorized by all necessary corporate actions of DEAC and the DEAC Controlling Shareholder, and no other corporate proceedings on the part of DEAC or other actions on part of the DEAC Controlling Shareholder are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. The board of directors of DEAC has unanimously adopted resolutions: (a) approving and declaring advisable the Share Exchange, this Agreement and the transactions contemplated by this Agreement; (b) declaring that it is in the best interests of the stockholders of DEAC that DEAC enters into this Agreement and consummates the Share Exchange upon the terms and subject to the conditions set forth in this Agreement; (c) directing that adoption of this Agreement be submitted to a vote at a meeting of the stockholders of DEAC; (d) recommending to the stockholders of DEAC that they adopt this Agreement (the " DEAC Board Recommendation "); and (e) to include the DEAC Board Recommendation in the DEAC Proxy Statement, if required. This Agreement constitutes the valid and legally binding obligation of DEAC, and is enforceable in accordance with its terms. DEAC does not need to give any notice to, make any filings with, or obtain any authorization, consent or approval of any government or governmental agency or other person in order for it to consummate the transactions contemplated by this Agreement, other than filings that may be required or permitted under states securities laws, the Securities Act of 1933, as amended (the " Securities Act ") and/or the Securities Exchange Act of 1934, as amended (the " Exchange Act ") resulting from the issuance of the New DEAC Shares.

 

Section 2.6 No Conflict or Violation . Neither the execution and delivery of this Agreement by DEAC and/or the DEAC Controlling Shareholder, nor the consummation by DEAC and/or the DEAC Controlling Shareholder of the transactions contemplated hereby will: (i) contravene or conflict with, or result in any violation or breach of any provision of the DEAC Charter Documents; (ii) contravene or conflict with, or result in any violation or breach of any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, court, administrative panel or other tribunal to which DEAC and/or the DEAC Controlling Shareholder are subject, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which DEAC and/or the DEAC Controlling Shareholder is a party or by which it is bound, or to which any of its assets is subject; or (iii) result in or require the creation or imposition of any encumbrance of any nature upon or with respect to any of DEAC's or any of the DEAC Controlling Shareholder's assets, including without limitation the New DEAC Shares and/or the DEAC Shares.

   

 
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Section 2.7 Material Agreements . Except as set forth on Schedule 2.7 attached hereto, DEAC is not a party to or bound by any contracts, including, but not limited to, any:

 

(a) employment, advisory or consulting contract;

 

(b) plan providing for employee benefits of any nature;

 

(c) lease with respect to any property or equipment;

 

(d) contract, agreement, understanding or commitment for any future expenditure in excess of $10,000 in the aggregate;

 

(e) contract or commitment pursuant to which it has assumed, guaranteed, endorsed, or otherwise become liable for any obligation of any other person, entity or organization; or

 

(f) agreement with any person relating to the dividend, purchase or sale of securities, that has not been settled by the delivery or payment of securities when due, and which remains unsettled upon the date of this Agreement.

 

Section 2.8 Litigation . To the knowledge of DEAC, there is no action, suit, proceeding or investigation (" Action ") pending or currently threatened against DEAC or any of its Subsidiaries or any of their respective affiliates before any court or by or before any governmental body or any arbitration board or tribunal, nor is there any judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or arbitrator. Neither DEAC nor any of its Subsidiaries or any of their respective affiliates is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no Action by DEAC or any of its Subsidiaries or any of their respective affiliates relating to DEAC currently pending or which DEAC or any of its Subsidiaries or any of their respective affiliates intends to initiate.

 

Section 2.9 Compliance with Laws; Permits. To the knowledge of DEAC, DEAC, each of its Subsidiaries and each of their respective affiliates has been and is in compliance with, and has not received any notice of any violation of any, applicable law, ordinance, regulation or rule of any kind whatsoever, including without limitation the Securities Act, the Exchange Act, the applicable rules and regulations of the SEC, or the applicable securities laws and rules and regulations of any state. DEAC is not an "investment company" as such term is defined by the Investment Company Act of 1940, as amended. Each of DEAC and its Subsidiaries possess from the appropriate Governmental Authority all licenses, permits, authorizations, approvals, franchises and rights that are necessary for POM to engage in its business as currently conducted and to permit DEAC and each of its Subsidiaries to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets (collectively, "DEAC Permits "). DEAC has not received notice from any Governmental Authority or other Person that it is lacking any license, permit, authorization, approval, franchise or right necessary for DEAC to engage in its business as currently conducted and to permit DEAC to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets. Except as would not have a Material Adverse Effect, DEAC Permits are valid and in full force and effect. Except as would not have a Material Adverse Effect, no event has occurred or to the knowledge of DEAC circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a violation of or a failure to comply with any DEAC Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any DEAC Permit. DEAC has not received notice from any Governmental Authority or any other Person regarding: (a) any actual, alleged, possible or potential contravention of any DEAC Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any DEAC Permit. All applications required to have been filed for the renewal of such POM DEAC have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such DEAC Permits have been duly made on a timely basis with the appropriate Persons. All DEAC Permits are renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of which have, to the extent due, been duly paid.  

 

 
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Section 2.10 Financial Statements; SEC Filings .

 

(a) To the knowledge of DEAC, DEAC's financial statements contained in its periodic reports filed with the Securities and Exchange Commission ( " SEC " and the " Financial Statements ") (a) complied as to form in all material respects with the published rules and regulations of the SEC in effect at the time of filing; (b) have been prepared in accordance with generally accepted accounting principles applicable in the United States of America ( "U.S. GAAP" ) applied on a consistent basis throughout the periods indicated and with each other, except that those of the Financial Statements that are not audited do not contain all footnotes required by U.S. GAAP. The Financial Statements fairly present the financial condition and operating results of DEAC as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments. Except as set forth in the Financial Statements or as disclosed in Schedule 2.10 , DEAC has no liabilities (accrued, absolute contingent or otherwise). DEAC is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. DEAC maintains and will continue to maintain until the Closing a standard system of accounting established and administered in accordance with U.S. GAAP.

 

(b) DEAC has timely filed all filings with the SEC that it has been required to make under the Securities Act and the Exchange Act (the " Public Reports "). Each of the Public Reports has complied in all material respects with the applicable provisions of the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act of 2002 (the " Sarbanes-Oxley Act ") and/or regulations promulgated thereunder. None of the Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. Each of the principal executive officers of DEAC and the principal financial officer of DEAC (or each former principal executive officer of the DEAC and each former principal financial officer of DEAC, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the DEAC Public Reports. There is no event, fact or circumstance that would cause any certification signed by any officer of DEAC in connection with any Public Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect in any respect. Neither DEAC nor any of its Subsidiaries has outstanding, or has arranged any outstanding, "extensions of credit" to directors or executive officers in violation of Section 402 of the Sarbanes-Oxley Act. As of the date hereof, DEAC has no reason to believe that its outside auditors and its principal executive officer and principal financial officer will not be able to give, the certificates and attestations required pursuant to the Sarbanes-Oxley Act when next due. There is no revocation order, suspension order, injunction or other proceeding or law affecting the trading of its Common Stock, except for such limitations imposed by FINRA and/or the SEC due to the Company being delinquent as a reporting company. All of the issued and outstanding shares of capital stock have been issued in compliance with the Securities Act and applicable state securities laws.

 

(c) Since the date of the filing of its annual report on Form 10-K for the year ended December 31, 2014, except as (i) specifically disclosed to POM or in the Public Reports; and (ii) as set forth on Schedule 2.10 : (A) there has been no event, occurrence or development that has resulted in or could result in a Material Adverse Effect (for purposes of this Section 2.10, a "Material Adverse Effect" means any event, occurrence, fact, condition, change, development, circumstance or effect (i) that is materially adverse to the business, assets, properties, liabilities, condition (financial or otherwise), operating results or prospects of DEAC and its Subsidiaries), or (ii) would prevent DEAC from consummating the transactions contemplated by this Agreement; (B) DEAC has not incurred any liabilities, contingent or otherwise, other than professional fees, which are not accurately disclosed in the Public Reports; (C) DEAC has not declared or made any dividend or distribution of cash or property to its shareholders, purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, or issued any equity securities; and (D) DEAC has not made any loan, advance or capital contribution to or investment in any person or entity, except as disclosed in the Public Reports.

 

(d) No Subsidiary of DEAC is subject to the periodic reporting requirements of the Exchange Act or is otherwise required to file any forms, reports, schedules, statements or other documents with the SEC, or any other governmental entity (whether or not located in the United States) that performs a similar function to that of the SEC or any securities exchange or quotation service.

 

Section 2.11 Books and Financial Records . To the knowledge of DEAC, the accounts, books, registers, ledgers, Board minutes and financial and other material records of whatsoever kind of each of DEAC and any Subsidiary of DEAC have been fully, properly and accurately kept and completed; there are no material inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial, contractual and legal position of DEAC and each such Subsidiary.

 

 
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Section 2.12 Employee Benefit Plans . DEAC does not have any "Employee Benefit Plan" as defined in the U.S. Employee Retirement Income Security Act of 1974 or similar plans under any applicable laws.

 

Section 2.13 Tax Returns, Payments and Elections . Except as set forth on Schedule 2.13 , each of DEAC and its Subsidiaries has timely filed all Tax (as defined below) returns, statements, reports, declarations and other forms and documents (including, without limitation, estimated tax returns and reports and material information returns and reports) (" Tax Returns ") required pursuant to applicable law to be filed with any Tax Authority (as defined below). All such Tax Returns are accurate, complete and correct in all material respects, and each of DEAC and its Subsidiaries has fully and timely paid all Taxes due. Each of DEAC and its Subsidiaries has withheld or collected from each payment made to each of its employees the amount of all Taxes (including, but not limited to, United States income taxes and other foreign taxes) required to be withheld or collected therefrom, and has paid the same to the proper Tax Authority. For purposes of this Agreement, the following terms have the following meanings: " Tax " (and, with correlative meaning, "Taxes" and "Taxable") means any and all taxes including, without limitation, (x) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any United States, local or foreign governmental authority or regulatory body responsible for the imposition of any such tax (domestic or foreign) (a " Tax Authority "), (y) any liability for the payment of any amounts of the type described in (x) as a result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee or successor thereof, and (z) any liability for the payment of any amounts of the type described in (x) or (y) as a result of any express or implied obligation to indemnify any other person.

 

Section 2.14 Absence of Undisclosed Liabilities . Except as disclosed in Section 2.14 , as of the Closing Date, DEAC will have no liabilities of any kind whatsoever. DEAC is not a guarantor of any indebtedness of any other person, entity or corporation.

 

Section 2.15 No Broker Fees . No brokers, finders or financial advisory fees or commissions will be payable by or to DEAC or the DEAC Controlling Shareholder of any of their affiliates with respect to the transactions contemplated by this Agreement, except as set forth in Schedule 2.7.

 

Section 2.16 No Disagreements with Accountants and Lawyers . There are no disagreements of any kind presently existing, or anticipated by DEAC to arise, between DEAC and any accountants and/or lawyers formerly or presently employed by DEAC.

 

Section 2.17 SEC Disclosure Controls and Procedures .

 

(a) DEAC has disclosed, based on the most recent evaluation of internal control over financial reporting, to the DEAC's auditors and the audit committee of the DEAC's board of directors "significant deficiencies" and "material weaknesses" (each as defined in Rule 12b-2 under the Exchange Act) in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the DEAC's ability to record, process, summarize and report financial information. To the knowledge of DEAC, there is no fraud, whether or not material, that involves management or other employees who have a significant role in DEAC's internal control over financial reporting.

 

 
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(b) (i) neither DEAC, nor, to the knowledge of DEAC, any director or officer of DEAC, has received or otherwise had or obtained knowledge of any written material complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of DEAC or any of its Subsidiaries, or their respective internal accounting controls, including any written material complaint, allegation, assertion or claim that DEAC or any of its Subsidiaries has engaged in accounting or auditing practices that do not comply with U.S. GAAP or DEAC's published internal accounting controls, and (ii) no attorney representing DEAC or any of its Subsidiaries, whether or not employed by DEAC or any of its Subsidiaries, has rendered a written report to the board of directors of DEAC or any committee thereof containing evidence of a material violation of applicable securities Laws, breach of fiduciary duty or similar violation by DEAC or any of its officers or directors.

 

Section 2.17 Voting .

 

(a) The affirmative vote of the holders of a majority of the outstanding shares of DEAC capital stock (" Requisite DEAC Vote ") is the only vote of the holders of any class or series of the capital stock of DEAC or any of its Subsidiaries necessary (under the DEAC Charter Documents, the Florida General Corporation Law, other applicable laws or otherwise) to approve and adopt this Agreement, the Share Exchange and the other transactions contemplated by this Agreement.

 

(b) There are no voting trusts, proxies or similar agreements, arrangements or commitments to which DEAC or any of its Subsidiaries is a party or of which DEAC has knowledge with respect to the voting of any shares of capital stock of DEAC or any of its Subsidiaries. There are no bonds, debentures, notes or other instruments of indebtedness of DEAC or any of its Subsidiaries that have the right to vote, or that are convertible or exchangeable into or exercisable for securities having the right to vote, on any matters on which stockholders of DEAC may vote.

 

Section 2.18 Governmental Authorizations .   The execution delivery and performance of this Agreement by DEAC and the consummation by DEAC of the transactions contemplated by this Agreement do not and will not require any consent, approval or other authorization of, or filing with or notification to (collectively, " Governmental Authorizations "), any international, supra-national, national, federal, state, provincial or local governmental, regulatory or administrative authority, agency, commission, court, tribunal, arbitral body or self-regulated entity, whether of Canada, the United States, or otherwise (each, a " Governmental Entity "), other than:

 

(a) the filing with the SEC of (i) a Form 14C information statement (the " Information Statement ") relating to providing information to the stockholders of DEAC concerning the adoption of this Agreement by majority consent of the shareholders, if required, and/or (ii) any other filings and reports that may be required in connection with this Agreement and the transactions contemplated by this Agreement under the Securities Act and the Exchange Act;

 

i. compliance with the rules and regulations of the OTC Markets; and

 

ii. compliance with Non-U.S. Antitrust Laws.

 

Section 2.19 Employee Benefit Plans .

 

(a) DEAC has no employee benefit plan maintained, established or sponsored by DEAC, or which DEAC participates in or contributes to (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), except for the DEAC Equity Incentive Stock Plan (the "Stock Plan") approved and effective as of August 27, 2015.

 

 
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(b) No other Contracts, plans or arrangements (written or otherwise) covering any current or former employee, director, officer, shareholder or independent contractor of DEAC or exists that, as a result of the execution of this Agreement, stockholder approval of this Agreement or the transactions contemplated by this Agreement (whether alone or in connection with any other events), could (i) result in severance pay or any increase in severance pay upon any termination of employment or (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the employee plans. There are no other contracts, plans or arrangements (written or otherwise) covering any current or former employee, director, officer, shareholder or independent contractor of DEAC that, individually or collectively, could give rise to the payment of any amount or benefit that would not be deductible pursuant to the terms of Section 280G of the Internal Revenue Code of 1986, as amended.

 

Section 2.20 Labor .

 

(a) Except as set forth on Schedule 2.20 , there are no employment, consulting, collective bargaining, severance pay, continuation pay, termination or indemnification agreements or other similar contracts of any nature (whether in writing or not) between DEAC or any of its Subsidiaries on the one hand, and any current or former, affiliate, officer, director, employee, consultant, labor organization or other representative of any of DEAC's employees, on the other hand, nor is any such contract presently being negotiated. DEAC is not delinquent in payments to any of its employees, consultants or independent contractors for any wages, salaries, commissions, bonuses, benefits, contributions or other compensation for any services or otherwise arising under any policy, practice, contract, plan, program or Law. DEAC is not liable for any severance pay or other payments to any employee, consultant or independent contractor or former employee, consultant or independent contractor arising from the termination of employment or other service relationship, nor will DEAC have any liability under any benefit or severance policy, practice, contract, plan, program or law which exists or arises, or may be deemed to exist or arise, as a result of or in connection with the transactions contemplated hereunder or as a result of the termination by DEAC of any Persons employed by or under contract with DEAC or on or prior to the Closing. DEAC's employment policies or practices is not currently being audited or investigated by any Governmental Authority or court. There is no pending or, to the knowledge of DEAC, threatened claim, unfair labor practice charge or other charge or inquiry against DEAC brought by or on behalf of any current, prospective or former employee, consultant, independent contractor, retiree, labor organization or other representative of DEAC's employee or other individual or any Governmental Authority with respect to employment practices brought by or before any court or Governmental Authority, nor is there or has there been any audit or investigation related to DEAC's classification of independent contractors and consultants.

 

(b) (i) To the knowledge of DEAC, there are no controversies pending or threatened, between DEAC, on the one hand, and any of its respective employees, consultants or independent contractors, on the other hand; (ii) DEAC is not a party to any collective bargaining agreement or other labor union contract applicable to Persons employed by DEAC nor are there any activities or proceedings of any labor union to organize any such employees, consultants or independent contractors of DEAC; (iii) there have been no strikes, slowdowns, work stoppages, disputes, lockouts or threats thereof by or with respect to any employees, independent contractors or consultants of DEAC, and (iv) there are no employment-related grievances pending or threatened. DEAC is not a party to, or otherwise bound by, any consent decree with, or citation or other order by, any Governmental Authority relating to employees or employment practices. DEAC is in compliance in all material respects with all applicable laws, contracts and policies relating to employment, employment practices, wages, hours and terms and conditions of employment, including the obligations of the U.S. Worker Adjustment and Retraining Notification Act of 1988, as amended (" WARN "), and any similar state or local statute, rule or regulation, and all other notification and bargaining obligations arising under any collective bargaining agreement, by law or otherwise. DEAC has not effectuated a "plant closing" or "mass layoff" (as those terms are defined in WARN or similar laws) affecting in whole or in part any site of employment, facility, operating unit or employee of DEAC without complying with all provisions of WARN or similar laws or implemented any early retirement, separation or window program, nor has DEAC planned or announced any such action or program for the future. 

 

(c) DEAC is not a party to or bound by any employment or consultant contract with any officer, employee or consultant that is not terminable by DEAC at will and without liability upon notice of thirty (30) days or less, except as set forth on Schedule 2.20 .

 

(d) None of DEAC, or, to the knowledge of DEAC, any of DEAC's employees, consultants or independent contractors is obligated under any contract (including licenses, covenants or commitments of any nature) or subject to any judgment, decree or order of any court or Governmental Authority that would interfere with the use of such Person's best efforts to promote the interests of DEAC or that would conflict with DEAC's business as conducted and as proposed to be conducted.

 

(e) All of DEAC's employees are "at will" employees subject to the termination notice provisions included in their employment agreements or applicable law, and there is no circumstance that could give rise to a valid claim by a current or former employee, contractor or consultant of DEAC for compensation on termination of employment.

 

(f) Each of DEAC's employees and/or contractor are currently devoting a reasonable amount of his or her business time to the conduct of the business of DEAC.

 

 
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Section 2.21 . Intellectual Property .

 

(a) Schedule 2.21(a) sets forth a complete and accurate list, as of the date of this Agreement, of (i) each issued patent, and trademark and copyright registrations owned by DEAC, (ii) each pending patent, trademark and copyright application filed by or on behalf of DEAC, (iii) each domain name registered by or on behalf of DEAC (the foregoing being, collectively, the " Registered Intellectual Property "), and (v) all material unregistered Intellectual Property owned by DEAC. Schedule 2.21(a) lists (i) the record owner of each such item of Registered Intellectual Property, (ii) the jurisdictions in which each such item of Registered Intellectual Property has been issued or registered or in which each such application has filed and (iii) the registration or application, as applicable. All Registered Intellectual Property is subsisting, unexpired, nor abandoned, in compliance with all legal requirements, not subject to any filings, fees or other actions falling due within ninety (90) days after the Closing Date, and, to the knowledge of DEAC, valid and enforceable. No material invention or process must be filed within ninety (90) days after the Closing Date to avoid a statutory bar to patentability.

 

(b) DEAC solely and exclusively own all right, title and interest in and to all Intellectual Property required to be set forth on Schedule 2.21(a) , free and clear of any liens or adverse claims from any other Person; and DEAC solely and exclusively own or otherwise have valid and continuing rights to use, transfer and license, free and clear of any liens or adverse claims from any other Person, all Intellectual Property (as defined below) used in, or necessary for, the business of DEAC as currently conducted and as currently proposed to be conducted.

 

(c) The conduct of DEAC businesses, including their products and services as presently performed and as currently contemplated to be performed, do not infringe upon, misappropriate or otherwise violate any Intellectual Property of any third party.

 

(d) To the knowledge of DEAC, no third Person has or is infringing, violating, or misappropriating any Intellectual Property owned by DEAC.

 

(e) Except as set forth on Schedule 2.21(e) , there is no pending or, to the knowledge of DEAC, threatened legal proceeding (including cease and desist letters, DMCA take-down notices or invitations to take a patent license), (i) claiming that DEAC has or is infringing, misappropriating or violating any Intellectual Property rights of any third Person or (ii) that concerns the ownership, use, validity or enforceability of any Intellectual Property owned by DEAC.

 

(f) Schedule 2.21(f) sets forth the policies and procedures that DEAC has implemented as of the date hereof with respect to content posted on the websites owned and operated by DEAC. DEAC fully complies with its own policies and procedures and have operated their businesses to maximize all applicable protections under the "safe harbors" of 47 U.S.C. §230 and 17 §U.S.C. 512 and any other equivalent laws. DEAC responds in a timely and proper manner to all complaints relating to Intellectual Property infringements, violations of the law and inappropriate conduct occurring on, through or in connection with their software, systems and websites, and there are no claims alleging otherwise.

 

(g) DEAC has taken all necessary actions, consistent with best practices in the industry in which DEAC operates, to protect (i) its Intellectual Property, its ownership, validity and/or value; (ii) the confidentiality of all material trade secrets of DEAC, and have disclosed such trade secrets only pursuant to adequate, written confidentiality agreements (true and complete copies of which have been provided to Purchaser) to the Persons set forth on Schedule 2.21(g) ; and (iii) the confidentiality, integrity and security of their software, systems and websites and all information and transactions stored or contained therein or transmitted thereby against any unauthorized or improper use (including any violation of rights of privacy or publicity), access, transmittal, interruption, modification or corruption, and there have been no breaches of either (i), (ii) or (iii).

 

 
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(h) DEAC has established privacy policies with respect to personally identifiable information which are in conformance with reputable industry practice. DEAC is in compliance in all material respects with such privacy policies and applicable United States federal and state, foreign, and multinational laws relating to personally identifiable information, if such information is obtained by the Company for any reason. No agreements have been made nor policies instituted that would limit use after the Closing Date of any personally identifiable information or that would conflict with DEAC's use of the personally identifiable information.

 

(i) Except as set forth on Schedule 2.21(i) , DEAC (i) has not provided to any third party, or otherwise permitted any third party to access, possess or use, any source code for any software owned or developed by or for DEAC (" DEAC Software "), (ii) is not currently a party to any source code escrow contract requiring the deposit of source code for any DEAC Software or providing for access to source code of any DEAC Software in specific circumstances, or (iii) has incorporated any "open source," "freeware," "shareware" or other Software having similar licensing or distribution models (including any GNU General Public License, Library General Public License, Lesser General Public License, Mozilla License, Berkeley Software Distribution License, Open Source Initiative License, MIT, Apache, Public Domain licenses and the like) (" Open Source ") in, or used any Open Source in connection with, any DEAC Software (or derived any Company Software from any Open Source) in a manner that (a) would subject any proprietary source code of DEAC to the terms of such open source license, (b) requires the contribution, licensing, provision or public disclosure to any third party of any source code for such Company Software, or (c) imposes limitations on DEAC's right to require royalty payments from or restrict further distribution of same.

 

(j) To the knowledge of DEAC, all Persons who have contributed to the creation, invention, modification or improvement of any Intellectual Property purportedly owned by DEAC in whole or in part, have signed written agreements ensuring that all such Intellectual Property is owned exclusively by DEAC and there are no claims or interests of third parties (including current and former employees or contractors or their current or former employers) alleging ownership interests in same. All amounts payable by DEAC to all Persons involved in the research, development, conception or reduction to practice of any Intellectual Property owned by DEAC have been paid in full. The transactions contemplated hereby shall not grant to or allow any Person any ownership interest in, or the right to use, any Intellectual Property owned, in whole or in part, by DEAC.

 

(k) To the knowledge of DEAC, there all software, websites and systems owned or used by DEAC and all material products sold, licensed or made available to DEAC's customers (i) are free from any material defect, bug, virus, or programming, design or documentation error or corruption (ii) are fully functional and operate and run in a reasonable and efficient business manner and (iii) conform in all material respects to the specifications and purposes thereof.

 

" Intellectual Property " means all intellectual property and industrial property rights existing anywhere in the world, including all rights associated with: (i) patents and patent applications, utility models, industrial designs and any continuations, continuations-in-part, reissues or reexaminations and patents issuing thereon (collectively, " Patents "), (ii) trademarks, service marks, trade dress, logos, corporate names, trade names and Internet domain names and other source indicators, together with the goodwill associated with any of the foregoing, and all applications and registrations therefor (collectively, " Trademarks "), (iii) copyrights, copyrightable works (including Software, systems and website content) and registrations and applications therefor, works of authorship and moral rights (collectively, " Copyrights "), and (iv) confidential and proprietary information, including trade secrets, discoveries, concepts, ideas, research and development, algorithms, know-how, formulae, inventions (whether or not patentable), processes, techniques, technical data, designs, drawings, specifications, databases (collectively, " Trade Secrets ").

 

 
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Section 2.22 Title to and Condition of Properties . DEAC owns or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of DEAC as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on DEAC. The material buildings, plants, machinery and equipment necessary for the conduct of the business of DEAC as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment are in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

Section 2.23 Disclosure . This Agreement and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of DEAC in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE POM CONTROLLING SHAREHOLDERS

 

POM and each of the POM Controlling Shareholders hereby, jointly and severally represent, warrant and agree that all of the statements in the following subsections of this Article III are true and complete as of the date hereof, and will (except as contemplated by this Agreement) be true and complete as of the Closing Date as if first made on such date. The disclosure schedule attached hereto as Schedule 3.1 through 3.25 (the "POM Disclosure Schedules ") are divided into sections that correspond to the sections of this Article III. The POM Disclosure Schedules comprise of lists of all exceptions as to the truth and accuracy in all material respects of, and of all disclosures or descriptions required by, the representations and warranties set forth in the remaining sections of this Article III.

 

Section 3.1 Corporate Organization of POM . POM is a corporation duly organized, validly existing and in good standing under the laws of Nevada, and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned to be conducted. POM has delivered to DEAC and the DEAC Controlling Shareholder complete and correct copies of the following documents (collectively referred to herein as " POM Charter Documents "): (a) Articles of Association and the Certificate of Incorporation of POM; (b) any other document performing a similar function to the documents specified in clauses (a) or (b) adopted or filed in connection with the creation, formation or organization of POM; and (c) any and all amendments to any of the foregoing. POM is not in any material violation of any of the provisions of the POM Charter Documents. The minute books or the equivalent of POM contain true and accurate records of all meetings and consents in lieu of meetings of its Board of Directors and shareholders or stockholders, as applicable (" Corporate Records "), from the time of its organization until the date hereof. The share register and other ownership records of the shares of all of POM's shares (the " POM Share Records "), and are true, complete and accurate records of the ownership of the shares as of the date thereof and contain all issuances and transfers of such shares since the time of organization of POM.

   

 
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Section 3.2 Capitalization of POM; Title to the POM Shares . On the Closing Date, immediately before the consummation of the Share Exchange, the entire authorized capital stock of POM consisted of 20,000,000 shares of Common Stock, at par value of $0.001, of which 20,000,000 shares of Common Stock are issued and outstanding and 0 shares of Preferred Stock, at par value of $0.001, of which zero (0) shares of Preferred Stock are issued and outstanding, of which the ownership rights are stated in Schedule 1.1 which constitutes all of the POM Shares, commitments and conversion rights for equity of POM which will be issued and outstanding. All of the POM Shares are owned of record by POM. The POM Shares are the sole outstanding shares of capital stock of POM and there are no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of POM.

 

Section 3.3 Subsidiaries and Equity Investments . POM does not directly or indirectly own any capital stock or other securities of, or any beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation, limited liability company, partnership, limited partnership, joint venture or other company, person or other entity, including without limitation any Subsidiary of POM except for the Subsidiaries set forth in Schedule 3.3, attached hereto. Each of the Subsidiaries of POM is wholly-owned by the POM, directly or indirectly, free and clear of any liens. For purposes of this Agreement, a "Subsidiary" of a company means any entity in which, at the date of this Agreement, such company or any of its subsidiaries directly or indirectly owns any of the capital stock, equity or similar interests or voting power; and

 

Section 3.4 Authorization and Validity of Agreements . POM has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement constitutes the valid and legally binding obligation of POM and is enforceable in accordance with its terms against it. Except as set forth on Schedule 3.4 POM does not need give any notice to, make any filings with, or obtain any authorization, consent or approval of any government or governmental agency or other person in order for it to consummate the transactions contemplated by this Agreement, other than filings that may be required or permitted under states securities laws, the Securities Act and/or the Exchange Act resulting from the transfer and exchange of the POM Shares. The execution and delivery of this Agreement by POM, and the consummation by POM of the transactions contemplated hereby, have been duly authorized by all necessary corporate actions of POM, and no other corporate proceedings on the part of POM are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

 

Section 3.5 No Conflict or Violation . Neither the execution and delivery of this Agreement by POM, nor the consummation by POM of the transactions contemplated hereby will: (i) violate any provision of POM's Charter Documents, (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency, court, administrative panel or other tribunal to which POM is subject, assuming that all consents, approvals, authorizations, filings and notifications have been obtained or made, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which POM is/are a party or by which it/they is/are bound, or to which any of its/their/his assets is subject; or (iv) result in or require the creation or imposition of any encumbrance of any nature upon or with respect to any of POM's assets, including without limitation the POM Shares, other than such as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 
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Section 3.6 Compliance with Laws and Other Instruments . Except as would not have a Material Adverse Effect on POM, the business and operations of POM have been and are being conducted in accordance with all applicable foreign, federal, state and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all courts and governmental agencies and instrumentalities applicable to it. Except as would not have a Material Adverse Effect on POM, not, and is not, to its knowledge alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of POM Charter Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which POM is a party or by which any of POM' properties, assets or rights are bound or affected. To the knowledge of POM, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which any of POM are a party are (with or without notice or lapse of time or both) in material default thereunder or in material breach of any term thereof. To the knowledge of POM, POM is not subject to any obligation or restriction of any kind or character, nor are there, to the knowledge of POM, any event or circumstance relating to POM that materially and adversely affects in its business, properties, assets or prospects or that would prevent or make burdensome their performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby. "Material Adverse Effect" means, when used with respect to POM, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of POM, in each case taken as a whole or (b) materially impair the ability of POM to perform their obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which POM operate.

 

Section 3.7 Brokers' Fees . POM has no liability to pay any fees or commissions or other consideration to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

 

Section 3.8 Investment Representations .

 

(a)  The DEAC Shares will be acquired hereunder solely for the account of POM for investment, and not with a view to the resale or distribution thereof. POM understands and is able to bear any economic risks associated with acquiring the DEAC Shares. POM has have full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the DEAC Shares; and

 

(b) No offer to enter into this Agreement has been made to any of the POM Controlling Shareholders in the United States. POM including any of its respective affiliates or any person acting on its behalf or on behalf of any such affiliate, has engaged or will engage in any activity undertaken for the purpose of, or that reasonably could be expected to have the effect of, conditioning the markets in the United States for the DEAC Shares, including, but not limited to, effecting any sale or short sale of securities, prior to the expiration of any restricted period contained in Regulation S promulgated under the Securities Act (any such activity being defined herein as a " Directed Selling Effort "). To the best knowledge of POM, this Agreement and the transactions contemplated herein are not part of a plan or scheme to evade the registration provisions of the Securities Act, and the DEAC Shares are being acquired for investment purposes by POM. POM agrees that all offers and sales of the DEAC Shares from the date hereof and through the expiration of any restricted period set forth in Rule 903 of Regulation S (as the same may be amended from time to time hereafter) shall not be made to U.S. Persons (within the meaning of Regulation S) or for the account or benefit of U.S. Persons and shall otherwise be made in compliance with the provisions of Regulation S and any other applicable provisions of the Securities Act. Neither POM nor the POM Shareholders, including any of its representatives has conducted any Directed Selling Effort as that term is used and defined in Rule 902 of Regulation S and neither of them nor any of their respective representatives will engage in any such Directed Selling Effort within the United States through the expiration of any restricted period set forth in Rule 903 of Regulation S.

 

 
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Section 3.9 Ownership of Shares . POM Controlling Shareholders are both the record and beneficial owner of its respective POM Shares as detailed on Schedule 1.3 attached hereto. POM and the POM Controlling Shareholders shall transfer at the Closing, good and marketable title to the POM Shares, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire, proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever (" Liens ").

 

Section 3.10 Pre-emptive Rights . At Closing, POM did not have any pre-emptive rights or any other rights to acquire any POM Shares that have not been waived or exercised.

 

Section 3.11 Disclosure . This Agreement, the schedules hereto and any certificate attached hereto or delivered in accordance with the terms hereof by or on behalf of POM in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

 

Section 3.12 Title to and Condition of Properties . POM owns or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of POM as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on POM. The material buildings, plants, machinery and equipment necessary for the conduct of the business of POM as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment are in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

Section 3.13 Absence of Undisclosed Liabilities . Except as set forth on Schedule 3.13 , POM has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to POM) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date, except to the extent which may be set forth on or reserved against on POM unaudited consolidated financial statements for the fiscal years ended December 31, 2015, including an interim financial statement ending March 31, 2016, prior to the Second Closing. POM has not incurred any liabilities or obligations under agreements entered into, except in the usual and ordinary course of business since its inception on or about December 21, 2015, unless otherwise disclosed by POM to Company prior to the Second Closing.

 

Section 3.14 Change . Except as set forth on schedule 3.14, POM has not, since December 31, 2015:

 

(a)  Ordinary Course of Business . Conducted its business or entered into any transaction other than in the usual and ordinary course of business, except for this Agreement.

 

(b)  Adverse Changes . Suffered or experienced any change in, or affecting, their condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of their business, none of which would have a Material Adverse Effect:

 

(c)  Loans . Made any loans or advances to any Person (for purposes of this Agreement, "Person" means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions) other than travel advances and reimbursement of expenses made to employees, officers and directors in the ordinary course of business;

   

 
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(d)  Liens . Created or permitted to exist any Lien on any material property or asset of any of POM, other than (a) Liens for taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen's compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and material men and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves; (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business; and (d) Liens that would not have a Material Adverse Effect (" Permitted Liens ");

 

(e)  Capital Stock . Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of their shares or capital stock or any other of their securities or any equity security of any class of POM, or altered the term of any of their outstanding securities or made any change in their outstanding shares of capital stock or their capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise;

 

(f)  Dividends . Declared, set aside, made or paid any dividend or other distribution to any of their stockholders or shareholders;

 

(g)  Material POM Contracts . Terminated or modified any and all agreements, contracts, arrangements, leases, commitments or otherwise, of POM, of the type and nature that is required to be filed with the SEC (each a " Material POM Contract "), except for termination upon expiration in accordance with the terms thereof or as set forth in Schedule 3.14(g) ;

 

(h)  Claims . Released, waived or cancelled any claims or rights relating to or affecting any of POM in excess of US $10,000 in the aggregate or instituted or settled any Action involving in excess of US $10,000 in the aggregate;

 

(i)  Discharged Liabilities . Paid, discharged or satisfied any claim, obligation or liability in excess of US $10,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the ordinary course of business;

 

(j)  Indebtedness . Created, incurred, assumed or otherwise become liable for any indebtedness in excess of US $10,000 in the aggregate, other than professional fees;

 

(k)  Guarantees . Guaranteed or endorsed in a material amount any obligation or net worth of any Person;

 

(l)  Acquisitions . Acquired the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person;

 

(m)  Accounting . Changed their method of accounting or the accounting principles or practices utilized in the preparation of their financial statements, other than as required by U.S. GAAP; and

 

(n)  Agreements . Except as set forth on Schedule 3.14(n) , entered into any agreement, or otherwise obligated themselves, to do any of the foregoing.

 

 
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Section 3.15 Material POM Contracts . POM has made available to DEAC and the DEAC Controlling Shareholder prior to the date of this Agreement, true, correct and complete copies of each written Material POM Contract, including each amendment, supplement and modification thereto.

 

(a)  No Defaults . Each Material POM Contract is a valid and binding agreement of POM and is in full force and effect. Except as would not have a Material Adverse Effect, POM is not in material breach or default of any Material POM Contract to which it is a party and, to the knowledge of POM, no other party to any Material POM Contract are in breach or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that (with or without notice or lapse of time) would (a) contravene, conflict with or result in a violation or breach of, or become a default or event of default under, any provision of any Material POM Contract or (b) permit POM or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Material POM Contract. POM has not received notice of the pending or threatened cancellation, revocation or termination of any Material POM Contract to which it is a party. There are no renegotiations of, or attempts to renegotiate, or outstanding rights to renegotiate any material terms of any Material POM Contract.

 

Section 3.16 Material Assets . The financial statements of POM reflect the material properties and assets (real and personal) owned or leased by POM.

 

Section 3.17 Litigation; Orders . Except as set forth on Schedule 3.17 , there are no Actions (whether U.S. or non-U.S. federal, state, local or foreign) pending or, to the knowledge of POM, threatened against or affecting any of POM or any of POM's properties, assets, business or employees. To the knowledge of POM, there are no facts that might result in or form the basis for any such Action in POM. To the knowledge of POM, POM is not subject to any orders.

 

Section 3.18 Licenses . Except as would not have a Material Adverse Effect, POM possess from the appropriate Governmental Authority all licenses, permits, authorizations, approvals, franchises and rights that are necessary for POM to engage in its business as currently conducted and to permit POM to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets (collectively, "POM Permits "), including, but not limited to POM Permits related to the POM Rights. POM has not received notice from any Governmental Authority or other Person that it is lacking any license, permit, authorization, approval, franchise or right necessary for POM to engage in their business as currently conducted and to permit POM to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets. Except as would not have a Material Adverse Effect, POM Permits are valid and in full force and effect. Except as would not have a Material Adverse Effect, no event has occurred or to the knowledge of POM circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a material violation of or a failure to comply with any POM Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any POM Permit. POM has not received notice from any Governmental Authority or any other Person regarding: (a) any actual, alleged, possible or potential contravention of any POM Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any POM Permit. All applications required to have been filed for the renewal of such POM Permits have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such POM Permits have been duly made on a timely basis with the appropriate Persons. All POM Permits are renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of which have, to the extent due, been duly paid.

 

 
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Section 3.19 Interested Party Transactions . Except as disclosed on Schedule 3.19 , no officer, director or stockholder of any POM or any affiliate or "associate" (as such term are defined in Rule 405 of the SEC under the Securities Act) of any such Person, have or have had, either directly or indirectly, (1) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold by POM, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish any of POM any goods or services; or (2) a beneficial interest in any contract or agreement to which POM are a party or by which they may be bound or affected.

 

Section 3.20 Intellectual Property . Except as set forth on Schedule 3.20 hereto, POM does not own, use or license any Intellectual Property in their business as presently conducted. For purposes of this Agreement, "Intellectual Property" means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.

 

Section 3.21 Share or Stock Option Plans; Employee Benefits of POM .

 

(a)  Except as set forth on Schedule 3.21 hereto, POM has no share or stock option plans providing for the grant by POM of stock options to directors, officers or employees of POM.

 

(b)  Except as set forth on Schedule 3.21 hereto, POM has no employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided to POM.

 

(c)  Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of POM, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from POM, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual. No agreement, arrangement or other contract of POM provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of POM.

 

Section 3.22 Environmental and Safety Matters . Except as set forth on Schedule 3.22 and except as would not have a Material Adverse Effect:

 

(a)  POM has at all times been and is in compliance with all Environmental Laws (as defined below) applicable to POM.

 

(b) To POM knowledge, there are no Actions pending or threatened against POM alleging the violation of any Environmental Law (as defined below) or Environmental Permit applicable to POM or alleging that POM is potentially responsible parties for any environmental site contamination.

   

 
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(c)  To POM knowledge, neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Authority or third Persons under any Law or other requirement relating to the environment, natural resources, or public or employee health and safety ("Environmental Laws") applicable to POM.

 

Section 3.24 Board Recommendation . The Board of Directors of POM, at a meeting duly called and held, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of POM's stockholders and has duly authorized this Agreement and the transactions contemplated by this Agreement.

 

ARTICLE IV

 

COVENANTS

 

Section 4.1 Certain Changes and Conduct of Business .

 

(a)  From and after the date of this Agreement and until the Third Closing Date, DEAC (i) shall conduct its business solely in the ordinary course consistent with past practices that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in a manner consistent with all representations, warranties or covenants of DEAC contained herein; and (ii) use commercially reasonable efforts to maintain and preserve intact its business organization, to retain the services of its current officers and key employees, if possible, and to preserve the good will of its customers, suppliers and other Persons with whom it has business relationships, and without the prior written consent of POM (which may be withheld for any reason or no reason), will not:

 

(i)

except as provided in Section 4.6 hereof, make any change in its Charter Documents; issue any additional shares of capital stock or equity securities or grant any option, warrant or right to acquire any capital stock or equity securities or issue any security convertible into or exchangeable for its capital stock or alter in any material term of any of its outstanding securities or make any change in its outstanding shares of capital stock or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise; redeem, purchase or otherwise acquire, directly or indirectly, any shares of its capital stock or any securities convertible or exchangeable into or exercisable for any shares of its capital stock

(ii)

except as provided in Section 4.6 hereof:

A.  incur, assume or guarantee any indebtedness for borrowed money, issue any notes, bonds, debentures or other corporate securities or grant any option, warrant or right to purchase any thereof; or

B.  issue any securities convertible or exchangeable for debt or equity securities of DEAC.

(iii)

make or commit to make any material capital expenditures;

(iv)

increase the compensation or benefits payable or to become payable to any of its directors, officers or employees;

 

 
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(v)

grant any severance or termination pay to any of its directors, officers or employees or enter into any new employment or severance agreement with any of its directors, officers or employees;

(vi)

acquire, by merger, consolidation, acquisition of equity interests or assets, or otherwise, any business or any corporation, partnership, limited liability company, joint venture or other business organization or division thereof;

(vii)

sell, lease, license, transfer, pledge, encumber, grant or dispose of any material Intellectual Property Rights or any other assets of DEAC;

(viii)

enter into any material contract or terminate, cancel or amend in any material respect any such contract of DEAC;

(ix)

guarantee any indebtedness for borrowed money or any other obligation of any other person;

(x)

make any loan, advance or capital contribution to or investment in any person;

(xi)

make any change in any method of accounting or accounting principle, method, estimate or practice;

(xii)

commit itself to do any of the foregoing; or

(xiii)

will spin off any operating subsidiaries, except as provided for in existing agreements prior to the execution of this Agreement.

 

(b) From and after the date of this Agreement, POM will cause POM and each of POM Subsidiaries will:

 

(i)

continue to maintain, in all material respects, its properties in accordance with present practices in a condition suitable for its current use;

(ii)

file, when due or required, federal, state, foreign and other tax returns and other reports required to be filed and pay when due all taxes, assessments, fees and other charges lawfully levied or assessed against it, unless the validity thereof is contested in good faith and by appropriate proceedings diligently conducted;

(iii)

continue to conduct its business in the ordinary course consistent with past practices;

(iv)

keep its books of account, records and files in the ordinary course and in accordance with existing practices; and

(v)

make commercial reasonable efforts to maintain existing business relationships with suppliers.

 

(c) From and after the date of this Agreement, POM will not, without the prior written consent of DEAC (not to be unreasonably withheld, conditioned or delayed), sell, transfer, convey, assign or otherwise dispose of, or contract or otherwise agree to sell, transfer, convey, assign or otherwise dispose of any of the POM Shares except as provided by this Agreement until the third closing has been completed.

 

 
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Section 4.2 Access to Properties and Records . POM shall afford to DEAC's accountants, counsel and authorized representatives, and DEAC shall afford to each of the POM Shareholder's and POM's accountants, counsel and authorized representatives, full access during normal business hours upon prior notice throughout the period prior to the Closing Date (or the earlier termination of this Agreement) to all of such parties' properties, books, contracts, commitments and records (the " Disclosing Party ") and, during such period, shall furnish promptly to the requesting party all other reasonable information concerning the other party's business, properties and personnel as the requesting party may reasonably request, provided that no investigation or receipt of information pursuant to this Section 4.2 shall affect any representation or warranty of or the conditions to the obligations of any party; provided , further , however , that the Disclosing Party shall not be obligated to provide such access or information if the Disclosing Party determines, in its reasonable judgment, that doing so would violate applicable law or any contract or obligation of confidentiality owing to a third party, jeopardize the protection of an attorney-client privilege or expose the Disclosing Party to risk of liability for disclosure of sensitive or personal information.

 

Section 4.3 Negotiations . From and after the date hereof until the earlier of the Closing or the termination of this Agreement, each of DEAC and POM agrees that it shall not, and shall use its commercially reasonable efforts to cause its officers or directors (subject to such director's fiduciary duties), and anyone acting on its behalf, directly or indirectly, encourage, solicit, engage in discussions or negotiations with, or provide any information to, any person, firm, or other entity or group concerning any merger, sale of substantial assets, purchase or sale of shares of capital stock or similar transaction involving any party to this agreement.

 

Section 4.4 Consents and Approvals . The parties shall: (i) use their reasonable commercial efforts to obtain all necessary consents, waivers, authorizations and approvals of all governmental and regulatory authorities, domestic and foreign, and of all other persons, firms or corporations required in connection with the execution, delivery and performance by them of this Agreement; and (ii) diligently assist and cooperate with each party in preparing and filing all documents required to be submitted by a party to any governmental or regulatory authority, domestic or foreign, in connection with such transactions and in obtaining any governmental consents, waivers, authorizations or approvals which may be required to be obtained connection in with such transactions.

 

Section 4.5 Public Announcement . Unless otherwise required by applicable law, the parties hereto shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement and shall not issue any such press release or make any such public statement prior to such consultation and approval of the other party, except for required SEC filings.

 

Section 4.6 Permitted Stock Issuances . From and after the date of this Agreement until the Third Closing Date, neither DEAC nor POM shall issue any additional shares or shares of its capital stock, except as required for note conversions of Interim Financing set forth in Schedule 1.3(a) and Subsequent Financings set forth in Schedule 1.3(c) herein by mutual consent, and all other required issuances by the Company for share conversions of existing convertible notes and warrants when exercised.

 

Section 4.7 Notices of Certain Events. DEAC shall notify POM promptly of (i) any communication from any Person alleging that the consent of such Person (or another Person) is or may be required in connection with the transactions contemplated by this Agreement, (ii) subject to any legal requirements as to confidentiality, any communication from any governmental entity in connection with the transactions contemplated by this Agreement, (iii) any legal actions threatened in writing or commenced against or otherwise affecting DEAC, or (iv) any material event, change, occurrence, circumstance or development between the date of this Agreement and the Closing Date that makes any of the representations or warranties of the DEAC contained in this Agreement untrue or inaccurate.

 

 
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Section 4.8 Subsequent Financing Default . To the extent that within 24 months following the Third Closing Date, if DEAC shall not complete the Subsequent Financing as set forth in Schedule 1.3(c), then within five (5) business days from the second anniversary of the Third Closing Date on terms mutually agreed to by the parties hereto, prior to the third and final closing set forth in Schedule 1.1, a certain amount of equity in DEAC representing a total of not less than seventy-five percent (75%) voting control of Series B Convertible Preferred Stock of the Company, on a fully diluted basis, shall be transferred to POM Controlling Shareholders for no further consideration.

 

Section 4.9 Registration Rights . Following the Closing Date , POM Controlling Shareholders as the holders of New DEAC Shares shall have customary registration rights of the underlying shares of common stock, if such New DEAC Shares have been converted at the time of an applicable filed registration statement.

 

ARTICLE V

 

CONDITIONS TO OBLIGATIONS OF POM

 

The obligations of POM to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived, upon the mutual written consent of POM and DEAC.

 

Section 5.1 Representations and Warranties of DEAC and the DEAC Controlling Shareholders. All representations and warranties made by DEAC and the DEAC Controlling Shareholders in this Agreement shall be true and correct on and as of the Closing Date as if again made by DEAC and the DEAC Controlling Shareholders on and as of such date and insofar as any inconsistency or inaccuracy does not or will not have a DEAC Material Adverse Effect, except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case, subject to the limitations applicable to the particular date or period, they will be true and correct on and as of the Closing Date with respect to such date or period.

 

Section 5.2 Agreements and Covenants . Each of DEAC and the DEAC Controlling Shareholder shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by on or prior to the Closing Date.

 

Section 5.3 Consents and Approvals . All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement shall be in full force and effect on the Closing Date.

 

Section 5.4 No Violation of Orders . No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of DEAC shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

 

 
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Section 5.5 Other Closing Documents . Escrow Agent and POM, as applicable. shall have received such certificates, instruments and documents in confirmation of the representations and warranties of DEAC and the DEAC Controlling Shareholder, including without limitations received such certificates, instruments and documents set forth in Section 1.5, DEAC's and the DEAC Controlling Shareholder' performance of its obligations hereunder, and/or in furtherance of the transactions contemplated by this Agreement as POM and/or its respective counsel may reasonably request.

 

Section 5.6 Interim Financing . DEAC shall have completed the Interim Financing as set forth in Schedule 1.3.

 

Section 5.7 No Material Adverse Effect . No effect, event, change, occurrence, circumstance or development shall have occurred or exist that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 5.8 . Public Report . DEAC has timely filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by DEAC with the SEC, except for Form 10-K for period ending December 31, 2015, and Form 10-Q for period ending March, 2016, which are delinquent as of the First Closing Date.

 

Section 5.9 Appointment of New Directors . At the Third Closing, (i) POM's designees shall be duly appointed as two members to the Board of Directors of DEAC for a total of no less than five members, including the current members of DEAC prior to the Third Closing, provided that at least three (3) of the members of the Board of Directors are independent members, pursuant to DEAC's corporate governance policies and procedures set forth in Section 5.10 below, and (ii) subject to the effectiveness of a Schedule 14F-1 filed with the SEC on the Closing Date.

 

Section 5.10 Corporate Governance . Prior to the Third Closing, the parties hereto agree to develop and adopt a new corporate governance policies and procedures in the form of a Corporate Governance Policies and Procedures Manual (the " Corporate Governance Manual "), with governance information which will outline the Company's corporate and public market obligations to shareholders, in accordance with the applicable laws and policies of the Securities and Exchange Commission ("SEC"), Financial Industry Regulatory Authority ("FINRA"), and the Company's relevant stock market exchange of the United States of America. The purpose of the Corporate Governance Manual is to provide better corporate guidelines for the Company's management pertaining not only to the day-to-day affairs of the Company, but also the proper conduct of its officers and directors, and further provide greater transparency for all Company shareholders in any and all business dealings of the Company, including such that may involve its officers and directors personally.

 

Section 5.10 Over-the-Counter Listing . Subject to completing the necessary documentation, submitting required applications filings and receiving approvals thereof, DEAC shall continue to be quoted on an Over-the-Counter (OTC) markets in the U.S.

 

Section 5.11 Omitted .

 

 
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ARTICLE VI

 

CONDITIONS TO OBLIGATIONS OF DEAC

 

The obligations of DEAC to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by upon the mutual written consent of DEAC and POM:

 

Section 6.1 Representations and Warranties of POM . All representations and warranties made by POM in this Agreement shall be true and correct on and as of the Closing Date as if again made by POM, as applicable, on and as of such date and insofar as any inconsistency or inaccuracy does not or will not have a Material Adverse Effect, except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case, subject to the limitations applicable to the particular date or period, they will be true and correct on and as of the Closing Date with respect to such date or period.

 

Section 6.2 Agreements and Covenants . POM shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by each of them on or prior to the Closing Date.

 

Section 6.3 Consents and Approvals . All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date.

 

Section 6.4 No Violation of Orders . No preliminary or permanent injunction or other order issued by any court or other governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of POM, taken as a whole, shall be in effect; and no action or proceeding before any court or government or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

 

Section 6.5 Other Closing Documents . Prior to and a condition of the Third Closing, DEAC shall have received such certificates, instruments and documents in confirmation of the representations and warranties of POM, the performance of POM, and respective obligations hereunder and/or in furtherance of the transactions contemplated by this Agreement as DEAC or its counsel may reasonably request. If any such documents are deemed to be untrue, then POM shall resolve the matter prior to the Third Closing, which shall not be any later than December 31, 2016, and if such cannot be resolved by such date, DEAC shall have the right to rescind and terminate this Agreement pursuant to Article VIII.  

 

 
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ARTICLE VII

 

POST-CLOSING AGREEMENTS

 

Section 7.1 Consistency in Reporting . Each party hereto agrees that if the characterization of any transaction contemplated in this agreement or any ancillary or collateral transaction is challenged, each party hereto will testify, affirm and ratify that the characterization contemplated in such agreement was the characterization intended by the party; provided, however, that nothing herein shall be construed as giving rise to any obligation if the reporting position is determined to be incorrect by final decision of a court of competent jurisdiction.

 

Section 7.2 Schedule 14F-1 . If required, DEAC covenants and agrees to file a Schedule 14F-1 with the SEC in order to disclose the change of control in the Board of Directors of DEAC to occur 10 (ten) days after the filing of such Schedule 14F-1 pursuant to the Share Exchange.

 

ARTICLE VIII

 

MODIFICATION OF TRANSACTION TERMS,

TERMINATION AND ABANDONMENT

 

Section 8.1 Modification of Transaction Terms. In the event the Share Exchange contemplated herein cannot be completed in the form and substance as set forth in Section 1.1 hereinabove, the terms and conditions of this entire Agreement shall survive and remain in effect, and provided that any modifications made to the Transaction Terms shall be mutually agreed to by the parties hereto, any new structure contemplated by the parties shall abide by the same terms and conditions set forth in Schedule 1.1, 1.2, 1.3 and 1.4 (the "Modification of Transaction Terms") hereinbelow, in order to reflect the applicable transaction adjustments.

 

Section 8.2 Methods of Termination . This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time before the Closing:

 

(a) B y the mutual written consent of POM and DEAC;

 

(b)  By DEAC, on a material breach on the part of POM of any representation, warranty, covenant or agreement set forth in this Agreement, or if any representation or warranty of POM shall become untrue, in either case such that any of the conditions set forth in Article VII hereof would not be satisfied (a " POM Breach "), and such breach, if capable of cure, has not been cured within twenty (20) business days after receipt by POM of a written notice from DEAC setting forth in detail the nature of such POM Breach;

 

(c) By POM, upon a material breach on the part of DEAC of any representation, warranty, covenant or agreement set forth in this Agreement, or, if any representation or warranty of DEAC shall become untrue, in either case such that any of the conditions set forth in Article VI hereof would not be satisfied (a " DEAC Breach "), and such breach, if capable of cure, has not been cured within twenty (20) business days after receipt by DEAC of a written notice from POM setting forth in detail the nature of such DEAC Breach;

 

(d) By either DEAC or POM, if the Second Closing shall not have consummated before August 14, 2016, or if after the Second Closing, the Third Closing shall not have consummated before December 31, 2016; provided , however , that this Agreement may be extended by written notice of either POM or DEAC if the Second Closing or Third Closing shall not have been consummated as a result of POM or DEAC having failed to receive all required regulatory approvals or consents with respect to this transaction or as the result of the entering of an order as described in this Agreement; and further provided, however , that the right to terminate this Agreement under this Section 8.2(d) shall not be available to any party whose failure to fulfill any obligations under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before this date;  

 

 
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(e) By either POM or DEAC if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the parties hereto shall use its best efforts to lift), which permanently restrains, enjoins or otherwise prohibits the transactions contemplated by this Agreement;

 

(f) By either POM or DEAC if the other party breaches any of its covenants in Section 4.3 hereof in any material respect; OR

 

(g) By either POM if DEAC Material Adverse Effect occurs following the date hereof.

 

Section 8.3 Procedure Upon Termination . In the event of termination and abandonment of this Agreement pursuant to Section 8.2, written notice thereof shall forthwith be given by the terminating parties to the other parties and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action. If this Agreement is terminated as provided herein, no party to this Agreement (or any stockholder, director, officer, employee, agent or representative of such party) shall have any liability or further obligation to any other party to this Agreement; provided, however , that no termination of this Agreement pursuant to this Article VIII shall relieve any party of liability for a breach of any provision of this Agreement occurring before such termination, including, but not limited to, DEAC's obligation to POM related to Interim Financings set forth in Schedule 1.3(a) herein; provided, further, that if such termination results from the intentional (a) failure of any party to perform its obligations or (b) breach by any party of its representations or warranties contained in this Agreement, then such party shall be fully liable for any liabilities incurred or suffered by the other parties as a result of such intentional failure or breach. The provisions of Section 5.17, Section 8.3 and Article VIII shall survive any termination of this Agreement.

 

In the event the Agreement is terminated, on the date of termination, DEAC shall assign and transfer any and all ownership interest in POM Shares back to the POM Controlling Shareholders, and POM Controlling Shareholders shall assign and transfer any and all ownership interest in New DEAC Shares back to DEAC for cancellation and returned of such shares to DEAC's treasury. In the event DEAC has arranged and completed any of the Subsequent Financings as set forth in Schedule 1.4(c), then POM and POM Controlling Shareholders shall be required to abide by the terms of the Subsequent Financings, mutually agreed to by the parties as such time, and if such Subsequent Financings was completed directly with DEAC and not a third-party, POM and POM Controlling Shareholders shall be responsible for the repayment of such funds advanced by DEAC as if DEAC was a third-party investor or lender under the terms and conditions set forth in such financing agreement(s) executed by DEAC and POM. POM and POM Controlling Shareholder mutually agree in advance to execute any and all necessary documents to effect such financial arrangement with DEAC if a termination does occur prior to the Third Closing. If no Subsequent Financings has occurred prior to the Second Closing and/or Third Closing, POM and POM Shareholders shall not have any further obligations to DEAC, except as otherwise provided for herein.

 

ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

Section 9.1 Survival of Provisions . The respective representations, warranties, covenants and agreements of each of the parties to this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before each Closing Date) shall expire on each Closing Date, as provided for herein. In the event of a breach of any of such representations, warranties or covenants, the party to whom such representations, warranties or covenants have been made shall have all rights and remedies for such breach available to it under the provisions of this Agreement or otherwise, whether at law or in equity, regardless of any disclosure to, or investigation made by or on behalf of such party on or before each such Closing Date.

 

 
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Section 9.2 Indemnification .

 

1.  The DEAC agrees to indemnify and hold harmless POM 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 representation, warranty, covenant or agreement made by or to be performed on the part of the Company under this Agreement and will reimburse any such Person for all such amounts as they are incurred by such Person.

 

2.  POM and the POM Controlling Shareholders, jointly and severally, agrees to indemnify and hold harmless the DEAC 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 POM under this Agreement and will reimburse any such Person for all such amounts as they are incurred by such Person.

 

Section 9.3 Publicity . No party shall cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without the consent of the other parties, unless a press release or announcement is required by law. If any such announcement or other disclosure is required by law, the disclosing party agrees to give the non-disclosing parties prior notice and an opportunity to comment on the proposed disclosure.

 

Section 9.4 Successors and Assigns . This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties.

 

Section 9.5 Fees and Expenses . Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses.

 

Section 9.6 Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested), by facsimile (with written confirmation of transmission) or by electronic mail, to the parties at the following addresses:

 

If to POM to:

 

PROPERTIES OF MERIT INC.

3275 S. Jones Blvd., Ste. 104

Las Vegas, NV 89146

Attn: Nicola Suppa, President

Phone: (416) 575-0884 

E-Mail: nickthemac@hotmail.com

 

 
28
 

 
 

with a copy to:

 

A.M. Santos Law, CHTD.  

3275 S. Jones Blvd., Ste. 104

Las Vegas, NV 89146

Attn: Anthony M. Santos  

Phone: (702) 749-4594  

E-Mail: tony@amsantoslaw.com

 

If to DEAC and/or the DEAC Controlling Shareholders, to:

 

ELITE DATA SERVICES INC.  

4447 N. Central Expressway

Suite 110-135

Dallas, TX 75205  

Attn: Chief Executive Officer  

Phone: (972) 885-3981  

E-Mail: corp@edscompanies.com

 

or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or communication shall be deemed to have been given (a) if delivered by hand or international courier service, when such delivery is made at the address specified in this Section 9.6, (b) if delivered by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 9.6 and appropriate confirmation is received, or (c) if delivered by electronic mail, when transmitted to the e-mail address specified in this Section 9.6 and appropriate confirmation is received. No change in any of such addresses shall be effective insofar as notices under this Section 9.6 are concerned unless such notice of such change shall have been given to such other party hereto as provided in this Section 9.6.

 

Section 9.7 Entire Agreement . This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement. No prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit involving this Agreement.

 

Section 9.8 Severability . This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.

 

Section 9.9 Titles and Headings . The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.

 

 
29
 

 

Section 9.10 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 be considered one and the same agreement.

 

Section 9.11 Convenience of Forum; Consent to Jurisdiction . The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of Florida located in the Florida, and/or the United States District Court located in that jurisdiction, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 9.6.

 

Section 9.12 Enforcement of the Agreement . The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereto, this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 9.13 Governing Law . This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of Florida without giving effect to the choice of law provisions thereof.

 

Section 9.14 Amendments and Waivers . Except or otherwise provided herein, no amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

Section 9.15 No Third-Party Beneficiaries . This Agreement is not intended to confer any rights or remedies upon any Person other than the parties to this Agreement.

 

Section 9.16 Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ITS SUCCESSORS AGAINST ANY OTHER PARTY HERETO OR ITS SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

Section 9.17 Counterparts; Effectiveness . This Agreement may be executed in any number of counterparts, all of which shall be one and the same agreement. This Agreement shall become effective when each party to this Agreement has received counterparts signed by all of the other parties.

 

[REST OF PAGE DELIBERATELY LEFT BLANK]

 

[SIGNATURES ON PAGE TO FOLLOW]

   

 
30
 

 

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

 

 

POM

 

PROPERTIES OF MERIT INC.

 

     
By:

/s/ Nicola Suppa

 

 

Nicola Suppa

 

 

President

 

 

POM CONTROLLING SHAREHOLDER

 
By:

/s/ Nicola Suppa

Nicola Suppa

 

Shares of Common Stock Outstanding:

20,000,000

Total Number Shares of Controlling Shareholder:

20,000,000

Number of Votes per Share of Common Stock:

1

Number of Votes of Controlling Shareholder:

20,000,000

Percent of Outstanding Shares Consenting:

100.00%

 

 
31
 

 

DEAC

 

ELITE DATA SERVICES INC.

 

     
By:

/s/ Charles Rimlinger

 

 

Charles Rimlinger

 

 

Chief Executive Officer

 

 
DEAC CONTROLLING SHAREHOLDER(S)
 
By:

/s/ Dr. James G. Ricketts

Dr. James G. Ricketts

 

Shares of Series B Preferred Stock Outstanding: 2,000,000

Total Number Shares of Controlling Shareholder:

1,000,000

Number of Votes per Share per Series:

1

Number of Votes per Share to Common Stock:

1,000,000,000

Percent of Outstanding Series B Shares Consenting:

50.00%

 

By:

/s/ Stephen Antol

Stephen Antol

 

Shares of Series B Preferred Stock Outstanding: 2,000,000

Total Number Shares of Controlling Shareholder:

1,000,000
Number of Votes per Share per Series: 1
Number of Votes per Share to Common Stock: 1,000,000,000
Percent of Outstanding Series B Shares Consenting: 50.00%

 

 
32
 

 

Exhibit A

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT , dated as of May 20, 2016 (this " Escrow Agreement ") by and among PROPERTIES OF MERIT INC., a Nevada corporation ("POM"), and the undersigned (the "POM Controlling Shareholder"), and ELITE DATA SERVICES INC., a Florida corporation, and the undersigned (together, the "DEAC Controlling Shareholders"), and A.M. Santos Law, CHTD, as the escrow agent (the " Escrow Agent ") (each a "Party" and, collectively referred to as the "Parties").

 

W I T N E S S E T H:

 

WHEREAS, the DEAC and POM entered into that certain Definitive Agreement (the "Definitive Agreement"), dated May 20, 2016, of which this Escrow Agreement is made a part of, pursuant to which DEAC agreed to acquire one hundred percent (100%) of the ownership interest in POM, in the form of three (3) separate closings beginning on or about May 20, 2016, subject to the terms and conditions set forth in the Definitive Agreement;

 

WHEREAS, pursuant to Article I and Schedule 1.1, 1.2, and 1.3 of the Definitive Agreement, the parties agreed to a certain number of issued POM Shares and New DEAC Shares, as defined in the Definitive Agreement (referenced herein to as the " Escrowed Shares "), to be transferred to and held by the Escrow Agent, as set forth in the Definitive Agreement; and

 

WHEREAS , the parties desire to establish an escrow account with the Escrow Agent to hold the Escrowed Shares and administer said Escrowed Shares received by the Escrow Agent from the First Closing and the Second Closing (as defined in the Definitive Agreement), in accordance with the terms and conditions set forth in this Escrow Agreement, and Escrow Agent is willing to accept said Escrowed Shares in accordance with the terms hereinafter set forth.

 

NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

 

TERMS OF THE ESCROW

 

1.1  The parties hereby agree to establish an escrow (the " Escrow ") with the Escrow Agent whereby the Escrow Agent shall hold the Escrowed Shares, pursuant to the terms and conditions of the executed Definitive Agreement, attached hereto as Exhibit A.

  

1.2  The Escrow Agent shall hold and distribute the Escrow Shares, as delivered to the Escrow Agent from the First Closing and Second Closing, as follows:

 

1.2.1

Upon the completion of the Third Closing, all of the held Escrowed Shares, specifically, the POM Shares shall be transferred to DEAC, and New DEAC Shares shall be transferred to the POM Controlling Shareholders (as defined in the Definitive Agreement);

1.2.2

In the event, the Second Closing, or subsequently the Third Closing, does not occur as set forth in the Definitive Agreement, then all held Escrowed Shares, specifically, the POM Shares shall be transferred by to the POM Controlling Shareholders, and the New DEAC Shares shall be transferred to DEAC, pursuant to Article VIII of the Definitive Agreement.

 

 
33
 

 

1.3  The Escrow Agent shall have the right to be compensated a fee in the amount of $1,000.00 for the services to be provided herein, to be paid by DEAC prior to the Third Closing or in the event of a default and termination of the Escrow.

 

1.4  Upon receipt of written instructions in a form and substance satisfactory to the Escrow Agent, received from each of the parties, as required, pursuant to the terms of the Definitive Agreement.

 

ARTICLE II

 

MISCELLANEOUS

 

2.1  No waiver or any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act.

 

2.2  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile prior to 5:30 p.m. (Eastern Time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile on a day that is not a Business Day or later than 5:30 p.m. (Eastern Time) on any Business Day, (c) the 2 nd Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. As used herein, "Business Day" shall mean 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.

 

2.3  This Escrow Agreement shall be binding upon and shall inure to the benefit of the permitted successors and permitted assigns of the parties hereto.

 

2.4  This Escrow Agreement (along with the related Assignment and Assumption Agreement) is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Escrow Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the parties to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein.

  

2.5  Whenever required by the context of this Escrow Agreement, the singular shall include the plural and masculine shall include the feminine. This Escrow Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all parties had prepared the same.

 

2.6  The parties hereto expressly agree that this Escrow Agreement shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of Florida. Any action to enforce, arising out of, or relating in any way to, any provisions of this Escrow Agreement shall only be brought in a state or Federal court sitting in Clark County, Nevada.

 

 
34
 

 
 

2.7  The Escrow Agent's duties hereunder may be altered, amended, modified or revoked only by a writing signed by the parties hereto.

 

2.8  The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Escrow Agent to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall not be personally liable for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while acting in good faith and in the absence of gross negligence, fraud and willful misconduct.

 

2.9  The Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Escrow Agent obeys or complies with any such order, judgment or decree, the Escrow Agent shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

2.10  The Escrow Agent shall not be liable in any respect on account of the identity, authorization or rights of the parties executing or delivering or purporting to execute or deliver any documents or papers deposited or called for hereunder in the absence of gross negligence, fraud and willful misconduct.

 

2.11  The Escrow Agent shall be entitled to employ such legal counsel and other experts as the Escrow Agent may deem necessary properly to advise the Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation; provided that the costs of such compensation shall be borne by the Escrow Agent.

 

2.12  The Escrow Agent's responsibilities as escrow agent hereunder shall terminate if the Escrow Agent shall resign by giving written notice to the Company and Purchaser. In the event of any such resignation, the Company and Purchaser shall appoint a successor escrow agent and the Escrow Agent shall deliver to such successor escrow agent any Escrow Items held by the Escrow Agent.

  

2.13  If the Escrow Agent reasonably requires other or further instruments in connection with this Escrow Agreement or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

2.14  It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the documents (if any) or the Escrow Items held by the Escrow Agent hereunder, the Escrow Agent is authorized and directed in the Escrow Agent's sole discretion (i) to retain in the Escrow Agent's possession without liability to anyone all or any part of said documents or the Escrow Items until such disputes shall have been settled either by mutual written agreement of the parties concerned by a final order, decree or judgment or a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings or (ii) to deliver the Escrow Items and any other property and documents held by the Escrow Agent hereunder to a state or Federal court having competent subject matter jurisdiction and located in the Clark County, Nevada, in accordance with the applicable procedure therefore.

 

2.15  The parties agree jointly and severally to indemnify and hold harmless the Escrow Agent and its partners, employees, agents and representatives from any and all claims, liabilities, costs or expenses in any way arising from or relating to the duties or performance of the Escrow Agent hereunder or the transactions contemplated hereby other than any such claim, liability, cost or expense to the extent the same shall have been determined by final, unappealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, fraud or willful misconduct of the Escrow Agent.

 

 
35
 

 
 

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

 

POM

 

 

PROPERTIES OF MERIT INC.

     
By:

/s/ Nicola Suppa

 

 

Nicola Suppa

 

 

President

 

 

 

 

POM CONTROLLING SHAREHOLDER  

 
By:

/s/ Nicola Suppa

Nicola Suppa

 

DEAC

 

ELITE DATA SERVICES INC.

 
By:

/s/ Charles Rimlinger

Charles Rimlinger

Chief Executive Officer

 

DEAC CONTROLLING SHAREHOLDER(S)

 
By:

/s/ Dr. James G. Ricketts

Dr. James G. Ricketts

 
By:

/s/ Stephen Antol

Stephen Antol

 

 
36
 

 

ESCROW AGENT

 

 

A.M. SANTOS LAW, CHTD.

 
By:

/s/ Anthony M. Santos

 

 

Anthony M. Santos

 

 

Principal

 

 

Address:

 

A.M. Santos Law, CHTD.

3275 S. Jones Blvd., Ste. 104

Las Vegas, NV 89146

Attn: Anthony M. Santos

Phone: (702) 749-4594

E-Mail: tony@amsantoslaw.com

 

 
37
 

 

Schedules

 

Schedules 1.1 through 1.2

 

Schedule 1.1 Acquisition of POM.

 

Pursuant to Section 1.1 of the Agreement , DEAC shall acquire, from POM, a certain percentage of the ownership interest in POM, in a series of closings in the form of one or more share exchanges, upon which POM shall become a wholly owned subsidiary of DEAC, after the final closing has occurred, under the following terms and conditions:

 

(a)    First Closing . At the first closing (the "First Closing", also referred to as the Initial Closing in this Agreement) on the Closing Date set forth in this Agreement, DEAC shall acquire a total of twenty percent (20%) of the ownership interest of POM, pursuant to the share exchange set forth in Schedule 1.2 below, and subject to certain transaction conditions set forth in Schedule 1.4(a) below.

 

(b)   Second Closing . At the second closing on or July 1, 2016 (the "Second Closing"), DEAC shall acquire an additional twenty percent (20%) of the ownership interest of POM, pursuant to the share exchange schedule set forth in Schedule 1.2 below, and subject to certain transaction conditions set forth in Schedule 1.3(b) below.

 

(c)    Third Closing . At the third closing on or October 1, 2016 (the "Third Closing" or "Final" Closing"), DEAC shall acquire a total of sixty percent (60%) of the ownership interest of POM, pursuant to the share exchange set forth in Schedule 1.2 below, and subject to certain transaction conditions set forth in Schedule 1.3(c) below.

 

Each Closing shall include a separate Closing Certificate (the "Closing Certificate") from both DEAC and POM evidencing compliance with the conditions of Closing pursuant to Article V and VI and the requirements for a closing as set forth in this Schedule 1.1;

 

Schedule 1.2 Agreement to Exchange POM Shares for New DEAC Shares.

 

Pursuant to the closings set forth in Schedule 1.1 hereinabove, (i) POM shall assign, transfer, and convey to DEAC the POM Shares and deliver such to the Escrow Agent, and in consideration and exchange therefor DEAC shall (ii) issue the New DEAC Shares to POM and deliver such to the Escrow Agent, pursuant to the terms of the Escrow Agreement, attached hereto as Exhibit A, in such amounts as described and set forth below:

 

Closing Date

 

Type of Shares

 

POM Shares (1)

 

 

New DEAC Shares (2)

 

 

 

 

 

 

 

 

 

 

First Closing

 

Common Shares

 

 

4,000,000

 

 

 

0

 

 

 

Preferred Shares

 

 

0

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

Second Closing

 

Common Shares

 

 

4,000,000

 

 

 

0

 

 

 

Preferred Shares

 

 

0

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

Third Closing

 

Common Shares

 

 

12,000,000

 

 

 

0

 

 

 

Preferred Shares

 

 

0

 

 

 

19,800,000

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

Common Shares

 

 

20,000,000

 

 

 

0

 

 

 

Preferred Shares

 

 

0

 

 

 

20,000,000

 

________ 

1

Reflects the number of POM Shares held by POM Controlling Shareholders to be transferred to DEAC on each represented closing date.

 
2

Reflects the number of New DEAC Shares in the form of Series B Preferred Stock to be issued to POM on each represented closing date.

 

 
38
 

 

Notwithstanding anything to the contrary herein, the total number of New DEAC Shares to be issued by DEAC to the POM Controlling Shareholders in exchanged for the transfer of the POM Shares once all the closings have occurred, shall equate to no less than sixty-five percent (65%) of the ownership interest of Series B Convertible Preferred Stock only, and not related to any issuances of common stock, as if all such New DEAC Shares were issued on the original Closing Date, unless otherwise modified, subject to mutual written consent by each of the parties hereto, in the form of an amendment to this Agreement.

 

Schedule 1. 3

 

Pursuant to the Recitals of this Agreement, the following represents the beneficial ownership positions of both the POM Controlling Shareholders and DEAC Controlling Shareholders prior to the Closing:

 

(a)  POM Controlling Shareholders.

 

On the First Closing Date, the capitalization of POM shall consist of the following:

 

Title of Class

 

Name and Address of Beneficial Owner

 

Amount and Nature of beneficial owner

 

 

Percentage of
Class (1)

 

Common Stock

 

Nicola Suppa

1314 E. Las Olas Blvd., Ste. 909

Ft. Lauderdale, FL 33301

 

 

20,000,000

 

 

 

100.00 %

Common Stock

 

All Affiliates and Non-Affiliates

 

 

20,000,000

 

 

 

100.00 %

_________ 

1.

Beneficial ownership is calculated based on 20,000,000 shares of common stock issued and outstanding as of May 20, 2016. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person's name, subject to community property laws, where applicable.

 

 
39
 

 

Title of Class

 

Name and Address of Beneficial Owner (2)

 

 

Amount and Nature of beneficial
owner

 

 

Percentage of
Class (1)

 

Preferred Stock

 

 

N/A

 

 

 

N/A

 

 

 

0 %

__________ 

1.

Beneficial ownership is calculated based on 0 shares of preferred stock issued and outstanding as of May 20, 2016. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person's name, subject to community property laws, where applicable.

 

(b)  DEAC Controlling Shareholders.

 

On the First Closing Date, the capitalization of DEAC shall consist of the following:

 

Title of Class

 

Name and Address of Beneficial
Owner (2)

 

 

Amount and Nature of beneficial owner

 

 

Percentage of
Class (1)

 

Common Stock

 

N/A

 

 

 

0

 

 

 

00.00 %

 

Common Stock

 

All Affiliates and Non-Affiliates

 

 

 

0

 

 

 

00.00 %

__________ 

1.

Beneficial ownership is calculated based on approximately 130,103,298 shares of common stock issued and outstanding as of May 20, 2016. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person's name, subject to community property laws, where applicable.

 

Title of Class

 

Name and Address of Beneficial
Owner (2)

 

Amount and Nature of beneficial
owner

 

 

Percentage of
Class (1)

 

Preferred Stock

Series B

 

Dr. James G. Ricketts

 

 

1,000,000

 

 

 

50.00 %

Preferred Stock

Series B

 

Stephen Antol

 

 

1,000,000

 

 

 

50.00 %

Preferred Stock

Series B

 

All Affiliates and Non-Affiliates

 

 

2,000,000

 

 

 

100.00 %

_________ 

1 .

Beneficial ownership is calculated based on 2,000,000 shares of preferred stock issued and outstanding as of May 20, 2016. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person's name, subject to community property laws, where applicable.

 

 
40
 

 

Schedule 1.3 Certain Transaction Conditions.

 

(a) Interim Financing . Within two (2) business days after the Initial Closing, POM shall advance a total of Twenty-Five Thousand Dollars ($25,000) to DEAC for the purposes of funding the completion of DEAC'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 "), in the form attached hereto as Exhibit B.

 

(b)   Books and Records . On or before the Second Closing as set forth in Schedule 1.1 above, POM shall 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, additional representations and warranties related to the underlying the operations of POM, audit financials on POM and any subsidiary acquired or formed by POM after the First Closing (the " Books and Records "), in form acceptable to DEAC, subject to the default provision Section 8.2, if such cannot be provided by POM.

 

(c)    Subsequent Financing . With thirty (30) days after the Initial Closing as set forth in Schedule 1.1 above, DEAC shall have arranged for initial funding to finance the POM operations related to the POM Rights set forth in this Agreement, in an amount of not less than $250,000, and thereafter additional funding in an amount of not less than $2.5M and up to $7.5M on or before the Second Closing, and additional funding in an amount of not less than $7.5M and up to $15M on or before the Third and Final Closing (the " Subsequent Financings "), on terms mutually agreed to by DEAC and the POM Controlling Shareholders.

 

Notwithstanding the forgoing, the Subsequent Financings may be completed in the form of either debt and/or equity or joint venture financing from either (a) DEAC to POM as inter-company financing to an operating subsidiary, or (b) from one or more third-parties directly into POM.

 

[INTENTIONALLY LEFT BLANK]

 

 
41
 

 

Schedules 2.1 through 2.18

 

"DEAC Disclosure Schedules"

 

Section 2.3 Capitalization.

 

As of the date of First Closing, DEAC had approximately 113,798,512 shares of Common Stock issued and outstanding (the "Common Stock") and 2,000,000 shares of Series B Preferred Stock issued and outstanding, (the "Preferred Stock").

 

Section 2.4 Subsidiaries and Equity Investments .

 

As of the date of First Closing, DEAC held 100% of the ownership interest in the following subsidiary entities:

 

1.

Elite Data Marketing LLC, a Delaware limited liability company; and

2.

Elite Gaming Ventures LLC, a Delaware limited liability, and its wholly owed subsidiary Elite Holdings S.A., a Honduras corporation.

 

Note: The only subsidiary formed and in effect as of the date of this Agreement is Elite Holdings S.A., a Honduras corporation, however, pursuant to the corporate resolutions approved by the Board of Directors of DEAC as of April 25, 2016, Elite Data Marketing LLC and Elite Gaming Ventures LLC, will be formed as soon as possible to complete the approved corporate restructuring of DEAC prior to the execution of this Agreement.

 

Section 2.7 Material Agreements.

 

See current report Form 10K 2014 for period ending December 31, 2014, Form 10Q-1 for period ending March 31,2015, Form 10Q-2 for period ending June 30, 2015, Form 10Q-3 for period ending September 30, 2015, and Form 8K dated on or about May 20, 2016, and other SEC filings as of date of execution of this Agreement.

 

Section 2.10 Financial Statements; SEC Filings .

 

See current report Form 10K 2014 for period ending December 31, 2014, Form 10Q-1 for period ending March 31,2015, Form 10Q-2 for period ending June 30, 2015, Form 10Q-3 for period ending September 30, 2015, and Form 8K dated on or about May 20, 2016, and other SEC filings as of date of execution of this Agreement

 

Section 2.13 Tax Returns, Payments and Elections .

 

The Company has not filed the applicable tax returns for 2013, 2014 and 2015. However, based on the audited year-end financials, no tax payments are expected due on the date of execution of this Agreement.

 

 
42
 

 

Schedule 3.1 through 3.25

 

POM Disclosure Schedules

 

Section 3.2 Capitalization of POM .

 

As of the date of Closing, the Company had 20,000,000 shares of Common Stock issued and outstanding (the "Common Stock") and zero shares of Preferred Stock issued and outstanding, (the "Preferred Stock").

 

Section 3.3 Subsidiaries and Equity Investments .

 

As of the date of First Closing, POM held 100% of the ownership interest in the following subsidiary entities:

 

1. 1015046 B.C. LTD., a British Columbia corporation.

 

Section 3.12 Title to and Condition of Properties .

 

Through its subsidiary as outlined in Section 3.3 herein, POM owns an ownership interest in all the precious and base metal production derived from the placer mining operation located in the Lillooet Rive Valley, about 80 kilometers northeast of Vancouver, Canada, under current development operated by its Subsidiary described in Section 3.3. hereinabove .

 

All mining properties defined as Pemberton Area, Lillooet River, New Westminster Mining Division, as more fully described in the geological report (the "River Project Report"), dated March 27, 2015, attached hereto as Exhibit C, are current and in good standing with the local government authorities in which they are located.

 

Section 3.13 Absence of Undisclosed Liabilities .

 

None at this time, except for subsequent liabilities requiring disclosure prior to the Second Closing, and Third Closing, pursuant to Schedule 1.3 hereinabove.

 

Section 3.15 Material POM Contracts .

 

POM has provided to DEAC and the DEAC Controlling Shareholder prior to the date of this Agreement, true, correct and complete copies of each written Material POM Contract, including each amendment, supplement and modification thereto, which shall be more fully described in the Second Closing .

 

Section 3.17 

Litigation; Orders .

N/A

 

 

 

Section 3.19 

Interested Party Transactions .

N/A

 

 

 

Section 3.21 

Intellectual Property .

N/A

 

 

 

Section 3.23 

Environmental and Safety Matters .        

N/A

 

 
43
 

 

Exhibit B

 

CONVERTIBLE REDEEMABLE NOTE
(POM Advance)

 

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 $25,000.00

 

ELITE DATA SERVICES, INC.

CONVERTIBLE REDEEMABLE NOTE

 

FOR VALUE RECEIVED, ELITE DATA SERVICES, INC. (the "Company") promises to pay to the order of PROPERTIES OF MERIT INC. and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of TWENTY-FIVE THOUSAND DOLLARS (U.S. $25,000.00), at ten percent (10%) interest per annum commencing on the date of execution (the " Effective Date "), due and payable to Holder by Company, plus accrued interest on the six month anniversary date following the execution of this Note (each a " Maturity Date "), pursuant to the terms of the Definitive 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 on 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.

 

 
44
 

 

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) priortrading 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.

 

 
45
 

 

(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 180 th 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.

 

 
46
 

 

(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

 

 
47
 

 

(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

 

(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 5 th day after the conversion notice was delivered to the Company. This penalty shall increase to $100 per day beginning on the 10 th 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%).

 

 
48
 

 

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.

 

[SIGNATURES ON PAGE TO FOLLOW]

 

 
49
 

 

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 20, 2016

By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 
50
 

 

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:

Barbara Brunton

Address:

4737 N Ocean Dr., #168

Ft Lauderdale, FL, 33308

Tel:

954-980-8391

SSN or EIN:

464739895

  

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

 

Account Name:

Barbara Brunton

Account #152911051

Address:

Alpine Securities Corporation

39 Exchange Place

Salt Lake City, UT, 84111

800-274-5588

 

 
52
 
 

EXHBIT C

 

RIVER PROJECT REPORT

(dated March 27, 2015)

 

 

 

 
53
 

 

 
54
 

 
55
 

 
56
 

 
57
 

 
58
 

 
59
 

 
60
 

 
61
 

 
62
 

 
63
 

 
64
 

 
65
 

 
66
 

 
67
 

 
68
 

 
69
 

 
70
 

 

71


EXHIBIT 10.78

 

TERMINATION AGREEMENT

 

OF

 

EQUITY PURCHASE AGREEMENT

 

This TERMINATION AGREEMENT OF EQUITY PURCHASE AGREEMENT (the "Agreement") dated as of this 24 th day of May, 2016, is among ELITE DATA SERVICES INC., a Florida corporation (the "Company") and TARPON BAY PARTNERS LLC, a Florida limited liability company (the "Tarpon"), pursuant to that certain Equity Purchase Agreement (the "Original Purchase Agreement") dated as of July 14, 2015. The parties agree as follows:

 

1. Reference to Agreements; Definitions . Reference is made to the agreements, exhibits, and instruments listed on Exhibit A hereto (collectively, the "Terminated Documents"). Terms defined in the Purchase Agreement and not otherwise defined herein are used herein with the meanings so defined.

 

2. No Exercise; No Obligations . The parties hereto confirm that the Company did not exercise on its rights to issue and sell to Tarpon any of the Five Million Dollars ($5,000,000) of the Company's common stock set forth in the Original Purchase Agreement due to unfavorable market conditions, and, as such, on May 17, 2016, filed a withdrawal letter (the "Withdrawal Letter") of the Registration Statement on Form S-1 originally filed with the Securities Exchange Commission (SEC) on September 28, 2015 (the "Registration Statement").

 

As a result of aforementioned, Company and Tarpon further confirm that there are no outstanding obligations owing by the Company to Tarpon as of the date hereof, except for obligation of the Promissory Note (the "Original Note") in the amount of USD $50,000.00 issued by the Company to Tarpon on July 14, 2015, pursuant to the terms of the Purchase Agreement.

 

3. Termination of Agreements . The Terminated Documents, excluding the Original Note, are hereby terminated and shall be of no further force or effect, except to the extent that any provisions contained in the Terminated Documents are stated to survive the termination thereof.

 

4. Conditions of Termination . In consideration for the termination of the Terminated Documents, as set forth hereinabove, the Company and Tarpon mutually agree as follows:

 

(a) Amended and Restated Note. The Company shall amend and restate the terms of the Original Note, in the form of the issuance of an amended and restated convertible redeemable note (the "Amended Tarpon Note"), attached hereto as Exhibit B, in the principal amount of $50,000.00, at ten percent (10%) interest per annum commencing on July 14, 2015 (the "Effective Date"), 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

 

 
1
 

 

(b) New Equity Purchase Agreement . The parties agree to t he execution of a new Equity Purchase Agreement (the "New Purchase Agreement"), pursuant to which the Company shall 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.

 

Notwithstanding the foregoing, in the event the Company becomes fully compliant with the SEC and FINRA and is subsequently relisted on the OTCBB and/or OTCQB markets, and Tarpon does not execute the New Purchase Agreement with Company, on or before July 15, 2016, then Company shall have the right to cancel any and all remaining quarterly payments not yet due under the Amended Tarpon Note. However, if the Company does not execute a New Purchase Agreement with Tarpon, on or before July 15, 2016, then the Amended Tarpon Note shall remain in full effect as an obligation of the Company.

 

(c) Further Assurance . The parties to this Agreement shall, upon the request and at the expense of the Company, take any actions and execute any documents reasonably necessary to effectuate this Agreement.

 

(d) Miscellaneous Provisions . This Agreement may be executed in any number of counterparts, which together shall constitute one instrument, shall be governed by and construed in accordance with the laws (other than the conflict of laws rules) of Florida and shall bind and inure to the benefit of the parties hereto and their representatives, successors and assigns.

 

[Remainder of this page has been intentionally left blank]

 

 
2
 

 

Each of the undersigned has caused this Agreement to be executed and delivered by its duly authorized officer as an agreement under seal as of the date hereof.

 

 

 

ELITE DATA SERVICES INC.,

 

A Florida corporation

 

       
By:

/s/ Charles Rimlinger

 

 

 

Charles Rimlinger

 

 

 

Chief Executive Officer

 

 

 

 

 

And,

 

TARPON BAY PARTNERS LLC,

 

A Florida limited liability company

 
By:

/s/ Stephen Hicks

Stephen Hicks

Manager

 

 
3
 

 

EXHIBIT A

 

TERMINATED DOCUMENTS

 

The following represents the Terminated Documents as described in this Agreement, and as set forth in the current report Form 8K dated July 20, 2015, filed with the Securities and Exchange Commission, incorporated by reference herein.

 

1.

Equity Purchase Agreement (Exhibit 10.52)

2.

Put Notice – Exhibit A to Equity Purchase Agreement

3.

Closing Certificate – Exhibit A to Equity Purchase Agreement

4.

Registration Rights Agreement (Exhibit 10.53)

 

The Promissory Note (Exhibit 10.54) is excluded from this list of Terminated Documents, as such is being amended and restated, pursuant to the terms of this Agreement.

 

 
4
 

 

EXHIBIT B

 

AMENDED AND RESTATED CONVERTIBLE REDEEMABLE NOTE

(Tarpon Bay Partners LLC)

 

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 $50,000.00

 

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 TARPON BAY PARTNERS LLC and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of FIFTY THOUSAND DOLLARS (U.S. $50,000.00), at ten percent (10%) interest per annum commencing on July 14, 2015, the execution date of the original promissory note (the " Effective Date "), due and payable to Holder 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 the date of the first quarter following the date of execution of this Note (each a " Maturity Date "), pursuant to the terms of the Termination Agreement dated even date herewith between Company and Holder, of which this Amended and Restated Convertible Redeemable Note ("Note") is made apart. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal and accrued interest hereunder and shall satisfy and discharge the liability for principal and accrued interest on this Note to the extent of the sum represented by such check or wire transfer.

 

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 July 1, 2016, and on the first day of the each calendar quarter thereafter (i.e. October 1, 2016, January 1, 2017, April 1, 2017) , to convert one-forth (1/4 th ) of the principal face amount of this Note ($12,500), plus all accrued interest on such converted principal, into shares of the Company's common stock (the " Common Stock ") at a price (" Conversion Price ") per share of Common Stock equal to 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 "), during the ten (10) priortrading 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).

 

(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 following the date of this Note, subject to the limits of Section 3(a) above, the Holder shall be entitled to convert the outstanding and unpaid principal amount, plus accrued interest on such converted principal, of this Note into fully paid and non-assessable shares of Common Stock in accordance with the stated Conversion Price. The Holder may not convert this Note to the extent such conversion would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock held by such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of Note are convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount of Note that would result in the issuance of in excess of the permitted amount hereunder, without regard to any other shares that the Holder or its affiliates may beneficially own, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date and, at the option of the Holder, either retain any principal amount tendered for conversion in excess of the permitted amount hereunder for future conversions or return such excess principal amount to the Holder. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company.

 

(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) 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 180 th 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.

 

(g) 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.

 

(h) 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

 

 
8
 

 

(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 5 th day after the conversion notice was delivered to the Company. This penalty shall increase to $100 per day beginning on the 10 th 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
 

 

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. All provisions herein made are expressly limited so that in no event whatsoever, whether by reason of advancement of proceeds hereof, acceleration of maturity of the unpaid balance hereof or otherwise, shall the amount paid or agreed to be paid to Holder shall be deemed to exceed the maximum rate of interest allowed to be charged under applicable law (the "Maximum Rate"), regardless of whether or not there has been an acceleration of the payment of principal as set forth herein. If, from any circumstances whatsoever, the fulfillment of any provision of this Note or any other agreement or instrument now or hereafter evidencing, securing or in any way relating to the indebtedness evidenced hereby shall involve the payment of interest in excess of the Maximum Rate, then, ipso facto , the obligation to pay interest hereunder shall be reduced to the Maximum Rate; and if from any circumstance whatsoever, Holder shall ever receive interest, the amount of which would exceed the amount collectible at the Maximum Rate, such amount as would be excessive interest shall be applied to the reduction of the principal balance remaining unpaid hereunder and not to the payment of interest. This provision shall control every other provision in any and all other agreements and instruments existing or hereafter arising between the Company and Holder with respect to the indebtedness evidenced hereby.

 

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 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.

 

14. 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.

 

15. 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 24, 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 10.79

 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
 

 

 


 

EXHIBIT 10.80

 

 

 
 
 

 
 
 

 

LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

OF

ELITE GAMING VENTURES LLC

 

This Limited Liability Company Operating Agreement (this " Agreement "), is entered into as of this 16th day of May 2016, by ELITE DATA SERVICES INC., a Florida corporation, as the initial member (the "Member") and the undersigned, as the initial manager (the "Manager"), of ELITE GAMING VENTURES LLC, a Florida limited liability company (the "Company") formed pursuant to the Florida Limited Liability Company Act, as amended from time to time (the " Act ").

 

RECITALS

 

Effective May 16, 2016, the Company was formed by the filing of the Articles of Organization with the Division of Corporations of the Secretary of State of the State of Florida and the entry into this Agreement.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Name . The name of the Company is ELITE GAMING VENTURES LLC.

 

2.  Purpose . The purpose of the Company is to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies formed under the Act, deemed by the Manager to be necessary, advisable, or convenient to, or in furtherance of, the foregoing purpose.

 

3.  Registered Office . The address of the registered office of the Company in the State of Florida is ELITE GAMING VENTURES LLC, 5011 South State Road 7, Suite 106, Davie, Florida 33314.

 

4.  Registered Agent . The name and address of the registered agent of the Company for service of process on the Company in the State of Florida is V-CORP SERVICES LLC, 5011 South State Road 7, Suite 106, Davie, Florida 33314 .

 

5.  Members . The name of the initial sole member of the Company is ELITE DATA SERVICES INC., a Florida corporation.     

 

6.  Powers . The business and affairs of the Company shall be managed by the Manager. Any matter herein which requires the vote, consent or approval of the Manager shall require the vote, consent or approval of a majority of the Manager. The Manager shall have the power and authority to do any and all acts necessary, advisable, or convenient to, or in furtherance of the purposes described herein, including all powers and authorities, statutory or otherwise, possessed by manager of limited liability companies under the Act.

 

7.  Dissolution . The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (a) upon the written consent or approval of the Manager, (b) upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of the Member or the occurrence of any other event which terminates the continued membership of the Member, or (c) the entry of a decree of judicial dissolution under the Act.

 

 

1

 

 
 

8.  Capital Contributions . Pursuant to the Act, the Member shall not be required to make any capital contributions to the Company.

 

9.  Additional Contributions . Capital contributions may be made from time to time when, as and if it is determined by the Manager as necessary or desirable to accomplish the purposes of the Company.

 

10.  Allocation of Profits and Losses . The Member shall be entitled to the profits and losses of the Company.

 

11.  Assignments . The Member may not assign in whole or in part its membership interest ("Membership Interest") in the Company without the consent of the Manager.

 

12.  Admission of Additional Members . One or more additional Members of the Company may be admitted to the Company with the consent of the Manager.

 

13.  Amendment . This Agreement may be amended upon the consent of the Manager and Member.

 

14.  Liability of Member . To the fullest extent of the Act, the Member shall not have any liability for the obligations or liabilities of the Company.

 

15.  Governing Law . This Agreement shall be governed by, and construed under, the laws of the State of Florida, all rights and remedies being governed by said laws. The Manager and Member hereby consent to the jurisdiction of the Courts of the State of Florida.

 

16.  Effectiveness . Pursuant to the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation of the Company with the office of the Florida Secretary of State.

 

17.  Rules of Construction. Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. The words "include" and "including" shall be deemed to be followed by the phrase "without limitation." The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Limited Liability Company Agreement as of the date and year first aforesaid.

 

 

MEMBER

 

ELITE DATA SERVICES INC. 

A Florida corporation

MANAGER

 

By:

/s/ Charles Rimlinger

By: 

/s/ Charles Rimlinger

Charles Rimlinger

Charles Rimlinger

Chief Executive Officer

Manager

 

 

2


EXHIBIT 10.81

 

 

 
 
 

 

 
 
 

 

LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
ELITE DATA MARKETING LLC

 

This Limited Liability Company Operating Agreement (this " Agreement "), is entered into as of this 16th day of May 2016, by ELITE DATA SERVICES INC., a Florida corporation, as the initial member (the "Member") and the undersigned, as the initial manager (the "Manager"), of ELITE DATA MARKETING LLC, a Florida limited liability company (the "Company") formed pursuant to the Florida Limited Liability Company Act, as amended from time to time (the " Act ").

 

RECITALS

 

Effective May 16, 2016, the Company was formed by the filing of the Articles of Organization with the Division of Corporations of the Secretary of State of the State of Florida and the entry into this Agreement.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Name . The name of the Company is ELITE DATA MARKETING LLC.

 

2. Purpose . The purpose of the Company is to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies formed under the Act, deemed by the Manager to be necessary, advisable, or convenient to, or in furtherance of, the foregoing purpose.

 

3.  Registered Office . The address of the registered office of the Company in the State of Florida is ELITE GAMING VENTURES LLC, 5011 South State Road 7, Suite 106, Davie, Florida 33314.

 

4.  Registered Agent . The name and address of the registered agent of the Company for service of process on the Company in the State of Florida is V-CORP SERVICES LLC, 5011 South State Road 7, Suite 106, Davie, Florida 33314 .

 

5.  Members . The name of the initial sole member of the Company is ELITE DATA SERVICES INC., a Florida corporation.

 

6.  Powers . The business and affairs of the Company shall be managed by the Manager. Any matter herein which requires the vote, consent or approval of the Manager shall require the vote, consent or approval of a majority of the Manager. The Manager shall have the power and authority to do any and all acts necessary, advisable, or convenient to, or in furtherance of the purposes described herein, including all powers and authorities, statutory or otherwise, possessed by manager of limited liability companies under the Act.

 

7.  Dissolution . The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (a) upon the written consent or approval of the Manager, (b) upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of the Member or the occurrence of any other event which terminates the continued membership of the Member, or (c) the entry of a decree of judicial dissolution under the Act.

 

 

1

 

 

8.  Capital Contributions . Pursuant to the Act, the Member shall not be required to make any capital contributions to the Company.

 

9.  Additional Contributions . Capital contributions may be made from time to time when, as and if it is determined by the Manager as necessary or desirable to accomplish the purposes of the Company.

 

10. Allocation of Profits and Losses . The Member shall be entitled to the profits and losses of the Company.

 

11. Assignments . The Member may not assign in whole or in part its membership interest ("Membership Interest") in the Company without the consent of the Manager.

 

12.  Admission of Additional Members . One or more additional Members of the Company may be admitted to the Company with the consent of the Manager.

 

13.  Amendment . This Agreement may be amended upon the consent of the Manager and Member.

 

14.  Liability of Member . To the fullest extent of the Act, the Member shall not have any liability for the obligations or liabilities of the Company.

 

15.  Governing Law . This Agreement shall be governed by, and construed under, the laws of the State of Florida, all rights and remedies being governed by said laws. The Manager and Member hereby consent to the jurisdiction of the Courts of the State of Florida.

 

16.  Effectiveness . Pursuant to the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation of the Company with the office of the Florida Secretary of State.

 

17.  Rules of Construction. Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. The words "include" and "including" shall be deemed to be followed by the phrase "without limitation." The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Limited Liability Company Agreement as of the date and year first aforesaid.

 

 

MEMBER

 

MANAGER

 

 

ELITE DATA SERVICES INC.

A Florida corporation

 
By: /s/ Charles Rimlinger

 

By:

/s/ Charles Rimlinger

 

Charles Rimlinger

 

 

Charles Rimlinger

 

Chief Executive Officer

 

 

Chief Executive Officer

 

 

 

2


 

EXHIBIT 99.1

 

 

DEAC Completes Corporate Restructuring and Signs Definitive (Acquisition) Agreement

 

DALLAS, TX -- (May 24, 2016) - Elite Data Services Inc. (OTC: DEAC ) (the "Company"), a newly restructured technology driven management company, today announced that it had completed a lengthy corporate restructuring plan, and executed a definitive agreement to acquire Properties of Merit Inc. ("POM"), a Nevada based mining corporation which has secured gold and precious metals production interests in British Columbia.

 

For the past several months, the Company's management team has been working diligently to restructure the Company in hopes to acquire additional operating assets to foster its growth. On March 10, 2016, the Company executed a Letter of Intent ("LOI") with POM to acquire its mining production interest in river claims located approximately 80 kilometers northeast of Vancouver, Canada in the lower Lillooet River Valley.

 

In order to complete the terms of a definitive agreement, management decided to restructure the Company first, which now includes three (3) separate subsidiaries (one minority owned) dedicated to our three different businesses: online marketing, gaming operations, and mining production interests .

 

In doing so, the Company recently formed Elite Data Marketing LLC and Elite Gaming Ventures LLC, both Florida limited liability companies, to manage the operations related to its online marketing and gaming businesses, respectively. In addition, the Company modified its original purchase of the gaming operations into a joint venture in order to limit certain financial impacts, and further executed assignments to move Company assets into their respective subsidiaries.

 

Separately, the Company executed several agreements with existing consultants, creditors, related parties and vendors in order to cancel non-performing agreements, reduce debt, extend payment terms of corporate obligations, and to provide compensation plans to parties actively working with the Company.

 

Charles Rimlinger, the Company's CEO stated, "This is a great day for the Company. We have struggled for the past year to build out our online marketing and gaming operations, but now we stand ready with a sense of renewed excitement to move this Company forward and to focus our efforts on new revenue streams, build up existing businesses, and increased shareholder value." He further added, "We are very much appreciative to all of our shareholders for being patient during this lengthy process."

 

The Company anticipates the initial closing with POM to occur on or before May 27, 2016.

 

Please refer to Current Report Form 8K dated May 24, 2016 filed with the Securities and Exchange Commission for more information on the Company's recent events.

 

 

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About Elite Data Services, Inc.


Elite Data Services Inc. ("Company"), a Florida corporation, is a technology driven management company which owns and operates businesses in areas of online marketing, gaming operations and mining interests. The Company is comprised of two (2) subsidiaries: Elite Data Marketing LLC, and Elite Gaming Ventures LLC, and minority interest in Properties of Merit Inc., with operations in the U.S., Canada and the island of Roatan, Honduras.

 

About Properties of Merit Inc.

 

Properties of Merit Inc.  ("POM"), a Nevada based mining company, which has secured production interests in certain placer mining river claims containing gold and other precious metals in addition to rare earth elements located approximately 80 kilometers northeast of Vancouver, Canada in the lower Lillooet River Valley.

 

Forward-Looking Statements

 

Non-historical statements included in this press release are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements relating to the Company's future performance are subject to many factors including, but not limited to: working capital and availability of capital, implementation difficulties, impacts involving key vendors, lenders, competitors, and other risks detailed in the Company's Form 10-K for the year ended December 31, 2014, and other subsequent SEC filings. Such statements are based upon management's current beliefs and expectations subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. When used in this press release, the terms "anticipate", "believe", "estimate", "expect", "may", "should", "plan", "possible", "potential", "project", "will", and similar expressions identify forward-looking statements. There is no guarantee that the Company will enter into the agreements referenced herein, nor if we do, that successful implementation will transpire. The forward-looking statements contained herein are made as of the date hereof, and we do not undertake any obligation to update any forward looking statements, whether as a result of future events, new information, or otherwise.

 

Investor and Public Relations Contact

Elite Data Services, Inc.
Charles Rimlinger
Chief Executive Officer 
(615) 905-4042
info@edscompanies.com

 

 

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