ATTEMPTS AT SETTLEMENT WITH ZIDWARE PLAINTIFFS

deeproot Tech, LLC
8200 W Interstate 10, Ste. 600
San Antonio, TX 78230-3877
P: (888) 316-2935 Opt. 3

SETTLEMENT BACKGROUND

Unfortunately, there are a lot of rumors and innuendo concerning deeproot Tech, LLC’s ("deeproot Tech") attempt to settle the lawsuit currently pending against Zidware, Inc. and John A. Popadiuk, Jr. deeproot Tech is providing this information to clarify and rebut the rumors about this settlement attempt.

In 2011 through approximately 2015, Zidware entered into various agreements with numerous individuals for the delivery of certain pinball games entitled: Magic Girl ("MG"), Retro Atomic Zombie Adventure ("RAZA", formerly BHZA), Alice in Wonderland ("AIW"), and/or Space Mission X ("SMX"). The agreements varied in terms with MG costing approximately $15,995 plus shipping and taxes with the other games costing approximately $10,000 plus shipping and taxes. The customers were not required to make a lump sum payment; instead the payments were spaced apart and loosely based on the relative development stage of the particular game. Based on information obtained by deeproot Tech, a majority of the customers for MG paid or substantially paid the full contract price. In contrast, a majority of the customers of the RAZA, AIW, and SMX games paid 25% to 65% of the full contract price. According to public statements made by John Popadiuk in 2015 (or earlier), Zidware ran out of money and could not finish any of the games. To date, nearly one-half of the deposits on RAZA & AIW have not been paid.

On May 7, 2015, Bruce Zamost filed a lawsuit against Zidware and the Popadiuks in Illinois ("Lawsuit"). Zamost asserted various legal claims concerning Zidware’s alleged failure to deliver RAZA. In the Lawsuit, Zamost acknowledges to paying $6,500.00 as compared to the contract price of $9,995.00. Ultimately, Zamost dropped out of the litigation and a total of 22 others joined. Shortly after the lawsuit was filed, Pintasia sought to assist Zidware with developing the games but ultimately elected to not pursue a relationship with Zidware. In late 2015 through early 2017, a second company, American Pinball, helped Zidware manufacture the MG games. In 2017, most of the MG customers received their MG games, including several of the plaintiffs. There have been wide spread complaints concerning the completeness and functionality of the delivered MG games but deeproot Tech has not physically reviewed one and cannot comment. Ultimately, American Pinball terminated its affiliation with Zidware by email on December 29, 2016. It is unknown if the Plaintiffs, or anyone else, has initiated any claims against American Pinball regarding the MG games.

Primarily between August 15, 2017 and October 13, 2017, deeproot Tech, through its legal counsel, attempted to negotiate an amicable settlement agreement ("Settlement") with Plaintiffs in the Lawsuit. deeproot Tech approached the Plaintiffs with a sincere offer of goodwill that would ultimately be offered to all of Zidware’s customers, not just the Plaintiffs. The offer was meant to provide something rather than nothing because the Plaintiffs were (and are) not likely to recover anything, even if they prevailed in the litigation. The offer was eventually reduced to a written Term Sheet in July 2017. After some further negotiation, was agreed to by all parties in early September 2017. The agreed to terms essentially consisted of the following:

These negotiations were intended to be confidential. deeproot Tech knew that upon settlement of the litigation it would offer substantially the same terms to every Zidware customer. However, considering there was active litigation it made logistical sense to first negotiate with the 22 Plaintiffs directly through their counsel to arrive at a settlement. As such, deeproot Tech wanted the negotiations to be confidential so as to prevent: rumors & innuendo, or undue influence over (or interference with) the confidential settlement negotiations. Unfortunately, deeproot Tech’s efforts at confidentiality, and abiding by continued confidentiality, backfired. Leaks began shortly after the term sheet was sent out with numerous posts on popular pinball forums as well as publication of incendiary podcasts. The publicly available information, particularly the podcasts, were filled with wild speculation and untrue statements mixed in with scant (out of context) truthful information. Some of the speculation on pinball forums was corrected, or put into context, but the damage was apparently irreperable. Despite the public revelations of the settlement, deeproot Tech elected to not take the debate public and continue to work through the attorneys to negotiate a settlement.

The lawyers for Zidware and the Plaintiffs continued fighting the litigation during the negotiations. Unfortunately, two deal-breaking revelations came to light on October 13, 2017 during four Plaintiff depositions: (i) Plaintiff's attorney, despite receiving the formal proposed settlement offer on October 11, 2017, failed to provide the offer to the individual Plaintiffs as of October 13, 2017; and (ii) despite previously raised objections by deeproot Tech, and apparently without their attorney’s knowledge, Plaintiffs Mitchell and Henley bought the causes of action from numerous of their fellow Plaintiffs for a stated price of $1 in an apparent (sham transaction) effort to avoid a court order for each Plaintiff to appear for deposition. Instead of the lawsuit having 22 Plaintiffs, there were now only four Plaintiffs. deeproot Tech designed a settlement agreement that would be beneficial for each of the Zidware customers and could not work with a structure in which one or more of the Plaintiffs controlled more than 10 claims. Unsure as to the questionable motives of the Plaintiffs, deeproot Tech formally retracted its settlement offer that same day.

Subsequently, it has become apparent that Plaintiffs have changed their mind about settlement as their attorney was now demanding concessions that changed from the previously agreed settlement term sheet. For example, the Plaintiffs seemingly had concerns about deeproot Tech’s financial status based on incorrect information, incorrect assumptions, and innuendo spread through pinball forums and podcasts. As a result, Plaintiffs seemingly wanted access to confidential or trade secret information concerning deeproot's financials despite being provided adequate publicly available information. Due to Plaintiffs leaking of confidential settlement negotiations, deeproot Tech justifiably refused to provide further access to such confidential and trade secret information. deeproot Tech was amenable to creating an escrow account to ensure payment upon failure to deliver the games as promised. However, it was not reasonable to waste additional thousands of dollars arguing over the terms of the escrow (i.e. how much money to escrow, what claims would be included, were attorney fees also to be escrowed, how and under what circumstances would they be paid out to Plaintiffs, or returned to deeproot, etc.). Finally, Plaintiffs did not want to dismiss their claims against Zidware with prejudice. This did not make sense as the whole point of settling a lawsuit is to actually settle the litigation. To the extent deeproot Tech or Zidware did not perform under the settlement agreement, Plaintiffs would be permitted to file an enforcement lawsuit for breach of the settlement agreement.

While deeproot Tech entered into these negotiations in good faith it is now uncertain as to whether the Plaintiffs reciprocated such good faith. Further, it appears certain individuals, in collusion with the group of Plaintiffs, are seeking to sway the Plaintiffs and public opinion against deeproot Tech and this settlement. It is unfortunate that the Plaintiffs are seemingly relying on pinball forums and podcasters for information concerning deeproot Tech and the settlement agreement when their attorney was their best resource. deeproot Tech believes that it is best to negotiate directly with the Plaintiffs’ through their attorney, or directly with the other Zidware customers through the claims process.

In the end, deeproot Tech spent hundreds of hours and tens of thousands in legal fees to try to address the Plaintiffs' concerns and make them whole. Time and money was expended unnecessarily that could have been better used to make them and other Zidware customers whole. At this point it is not logical to offer a deal to any current or former Plaintiff with this litigation still pending. It is unfortunate that the Plaintiffs chose to reject the settlement and ultimately choose nothing over something.

 

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